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I've just started my first job after completing my engineering PhD.

A financial advisor has said that I should consider taking out both income protection and life insurance. The quoted cost would be around £50/month for both plans.

The advice I received was based on the assumption that this monthly cost would be higher if I chose to take these plans out in five or ten years time when I have more people financially dependant on me. Currently live with my partner who is completing her PhD too.

But my thinking is £50/month until a retirement age of ~60 is around £21k (35x12x50). Is it likely that if I choose to take this plan out in 5 years time the payments would just be around £60/month so the total paid is around the same?

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    Is this being offered through your employer? A lot of these kinds of programs, where you get to participate voluntarily, are only available on a guaranteed issue basis when you're initially eligible so pricing and underwriting (your ability to participate at all) may be very different in 5 years. You may want to add a country tag because laws and norms for these programs vary greatly.
    – quid
    May 20, 2021 at 21:47
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    Please add a country tag. The need for private disability insurance, etc is strongly dependent on your country's social security system
    – Manziel
    May 21, 2021 at 7:00
  • UK tag added. We get 28 week's pay of £96.35 per week (SSP)
    – phald
    May 21, 2021 at 9:24
  • Is this being offered through your employer or is this just a random advisor you found?
    – quid
    May 21, 2021 at 16:42
  • An advisor my family have used
    – phald
    May 21, 2021 at 17:34

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Buy only the insurance you need at the time you need it for the amount you need it.

You don't need life insurance if no one is dependent on you.

Income protection is probably unnecessary: as an employee you are most likely covered through sick pay, short term/long term disability and other government programs. Most of these programs have also A LOT of exclusions so the coverage tends to be very narrow.

This sounds a little a bit like a "sales pitch". Consider whether you advisor is paid by the hour or if they get commissions for the products that they sell. Buying insurance early at a lower premium when the risk very low is typically good for insurance but not for you.

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  • Very valid points, and along similar lines to my own thinking. The advisor receives a healthy commission ~£1k, but would rather the insurance company pay that rather than me!
    – phald
    May 21, 2021 at 14:59
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The type of life insurance you are talking about is important. Term life insurance is very good, everything else is junk. Any life insurance that is positioned as an investment is junk (whole, universal, variable, etc), and is sold mainly to put lots of money in the salesperson's pocket.

As Hilmar mentioned, you should get life insurance when somebody would be substantially hurt financially if you die (like a dependent). I think there's a good reason to get some before that as well, which is that you could develop a life-shortening illness that would make it hard/impossible to get later on when you do have dependents. When you do buy life insurance, you need about 8-12 times your annual income, so 1M if you earn 100k per year.

"Income Protection" sounds like more junk. Disability insurance could be good to get depending on the type of job you have an risk level. Not everybody needs it, but if you are a high-earner with dependents you should consider it.

I agree with Hilmar - sounds like you're being sold to by your "financial advisor" - the vast majority of which are actually commission-driven sales people. Run.

As an aside, for £50/month as a healthy 30yr old, you can probably get a £1M term life insurance policy. I doubt that's what you're being offered.

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    Are you familiar with the UK market? Income Protection is a pretty standard offering and might be equivalent to what you call "Disability insurance".
    – GS - Apologise to Monica ♦
    May 21, 2021 at 11:17
  • Typical disability insurance or income protection pays regardless of the genesis of the disability. Your job would only be relevant to pricing an “own occupation” definition of disability, where you are considered disabled if you can no longer perform the duties of your own occupation, as opposed to “any occupation.” But whether the disability occurs due to a skiing accident or while you’re at work isn’t relevant.
    – quid
    May 21, 2021 at 16:18

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