Income protection is an insurance policy designed to cover you in case you lose your income for health reasons. When you take out a policy, the insurer is taking on the risk of you not being able to work because of your health at some point in the future. Naturally, then, your health will be factored in when the insurer is deciding whether or not to insure you and how much it should cost.
Your health is one variable that affects the price of an income protection policy – but there are many others too. These include your age, lifestyle, job, and what kind of cover you’re looking to buy, amongst other factors. In this guide we'll explore exactly how an existing medical condition might affect you when buying and claiming on an income protection policy.
Can I take out income protection if I’ve got a health condition?
You might be able to, but it depends what condition you have and how severe it is. Everyone has to provide information about their health when they apply for income protection insurance. If you disclose a health condition during your application, it’s likely that insurers will deem you higher risk to insure – so they might make the premiums more expensive for you, or exclude your particular condition from the cover. If your health condition is particularly severe, they might decline your application altogether.
Do I have to disclose my existing health condition?
It’s very important to be completely honest about your health when applying for income protection insurance. If not, you could run into problems when trying to make a claim, or even invalidate your policy altogether.
It’s only worth paying for cover that’s genuinely right for you, and will pay out when you need it to. No-one wants to pay for insurance only to find it won’t pay out when they need to claim because they didn’t declare an existing condition. This is why honesty is always the best policy when it comes to your income protection application.
What income protection policy is best for me if I’ve got a health condition?
The ideal scenario would be to find an insurer who’ll cover you for any medical reason – including your existing condition. This might be possible, but how likely it is depends on the nature and severity of your condition. Bear in mind that being covered for your existing condition would also be likely to make your policy more expensive.
Alternatively, you might be able to find an insurer who’ll cover you for any medical condition – excluding your existing condition. This means you wouldn’t be able to claim if your existing condition caused you to lose your income, but you would be able to claim for any other medical reason. Going down this route would make your policy more affordable.
Ultimately, it depends how much you can afford (and are comfortable) to spend – and what you’re trying to achieve by buying cover. If you definitely want to be covered for your existing condition, you might have less insurers to choose from and you might have to pay a bit more to be covered. If you’re happy to have it excluded, you might have greater choice and more affordable cover. It’s up to you and what you think constitutes peace of mind.
Can I claim on my income protection policy for an existing condition?
It depends whether or not you’re covered for the condition by your policy. Generally speaking, income protection covers you if you can’t work for any medical reason, but if you disclosed an existing condition when you applied, the insurer may have added an exclusion to your policy. In summary:
- You will be able to claim for an existing condition if: The insurer hasn’t added an exclusion to your policy, so you’re covered for the condition. This is most likely to be the case for less severe conditions, like mild asthma.
- You won’t be able to claim for an existing condition if: The insurer added an exclusion to your policy that means you’re not covered for the condition. This is most likely to be the case if your condition is more or very severe.
How a pre-existing health condition could affect your application
Depending on the nature and severity of the health condition you disclose during the underwriting process, there are four typical outcomes when trying to buy income protection with an existing condition:
- Your condition will be covered by the policy at no extra cost
- Your condition will be covered by the policy but a ‘loading’ will be added onto your monthly premiums (i.e. the cost will be higher than it would be for someone without your condition)
- Your condition will be excluded from your policy (so you wouldn’t be able to make a claim if you lost your income because of this condition)
- Your application will be declined (this happens if the insurer thinks your condition means you'll always be too high risk to insure)
- You might be able to buy income protection if you’ve got an existing health condition
- Having an existing condition could make it more expensive to get covered with income protection insurance
- The insurer might exclude your condition from your income protection policy, so you wouldn’t be able to claim for it (you could only claim if a different medical reason stopped you working)
- Depending what condition you have, some insurers might decline your income protection application
This post is intended for informative purposes only and does not constitute advice.