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Understanding the cost increases of income protection policies based on age: Plan ahead for your financial security

Planning & protection

23 May 2023


James Oram

Man looking at his computer

Income protection insurance is an essential tool that safeguards your financial stability in the event of unexpected illness or injury that prevents you from working. However, one crucial factor that affects the cost of an income protection policy is your age range.

Independent Financial Adviser, James Oram explores how age impacts the cost of income protection policies and why planning ahead is crucial.


20s and 30s

In your 20s and 30s, you’re just starting your career, and your earning potential is likely to increase over time. At this stage, you may be in good health, and the chances of experiencing health-related issues may seem remote.

However, this is precisely the time to consider income protection insurance. Premiums for income protection policies are typically lower when you’re younger as you’re seen as less risky to insure. Insurers consider your age, health, occupation, and other factors to assess the risk associated with providing you with income protection coverage.


40s and 50s

As you enter your 40s and 50s, your income potential may have significantly increased, and you may have additional responsibilities such as a mortgage, children’s education, and retirement savings. However, the cost of income protection insurance may also increase at this stage.

This is because insurers may consider you at a higher risk of experiencing health-related issues as you age. The probability of developing health conditions that may affect your ability to work may increase, resulting in higher premiums for income protection policies.


60s and beyond

As you approach your 60s and beyond, the cost of income protection insurance may further increase. This is because insurers may view you as a higher risk due to age-related health issues, and the likelihood of needing to make a claim may be higher.

At this stage, it’s critical to review your income protection policy and consider whether it still meets your needs. You may also want to explore other options for financial protection, such as retirement savings, investments, and other forms of insurance, to ensure your financial security in your retirement years.


Peace of mind

It’s important to note that while the cost of income protection policies may increase with age, the benefits of having this coverage in place outweigh the costs. Income protection insurance provides you with a safety net that helps you maintain your lifestyle and financial obligations if you’re unable to work due to illness or injury. It offers peace of mind and financial security during challenging times, ensuring that you and your loved ones are protected from financial hardships.


So, what can you do to manage the cost increases of income protection policies based on age? Here are some tips:

Plan ahead

Start considering income protection insurance in your 20s or 30s when premiums are typically lower. This allows you to lock in lower rates and secure coverage while you’re young and healthy.

Review and update your policy regularly

As you age, review your income protection policy to ensure it still aligns with your financial goals and needs. Consider adjusting the coverage amount and duration to suit your changing circumstances.

Maintain a healthy lifestyle

Leading a healthy lifestyle by exercising regularly, eating well, and managing stress may help you reduce the risk of health-related issues, which can impact the cost of your income protection policy.

Seek professional advice

Consider consulting with a financial adviser to help you understand the intricacies of income protection insurance and how it fits into your overall financial plan.


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