Many people wouldn't think twice about insuring their home, car or mobile phone. Yet the thing that helps pay for all of those, our income, is something many of us rarely stop to think about insuring.
For most households, income helps pay the mortgage, covers household bills, puts food on the table and gives us the freedom to plan for the future. Yet despite its importance, income protection insurance remains one of the most misunderstood forms of insurance.
Income protection insurance is designed to provide a regular income if illness or injury leaves you unable to work. But many people still aren't fully aware of what it covers, who it's for, or how it works when life doesn't go to plan.
To explain why, we spoke with LifeSearch's income protection insurance expert, Anthony Andreoli, about the common misconceptions he encounters and why awareness is beginning to improve.
The way we earn, spend and depend on our income has changed a lot over the last decade.
For many households, income does far more than cover day-to-day expenses. It helps pay the mortgage, manage household bills and support the lifestyle they've built. Losing an income, even for a short while, could quickly affect people’s ability to keep up their financial commitments.
Research from LifeSearch and HomeOwners Alliance found that almost half (46%) of mortgage holders would struggle to meet their mortgage payments within six months if illness or injury left them unable to work. One in five (21%) said they would face financial difficulties within just two months.
Despite this, income protection insurance remains relatively uncommon. The same research found that only 16% of mortgage holders currently have this type of cover, despite 67% having discussed insurance cover when taking out their mortgage.
"Most people understand the importance of insuring their home, but many haven't stopped to consider what would happen if the income paying for it suddenly disappeared."
One of the biggest misconceptions Anthony encounters is people confusing income protection insurance with critical illness cover.
"Customers will often tell me they need critical illness cover in case they can't work," he explains. "But that isn't really what critical illness cover is designed for."
Critical illness cover pays out a lump sum if you're diagnosed with one of a specific list of serious illnesses covered by your policy and meets its definition. Income protection insurance works differently. It can provide an ongoing monthly income if you're unable to work due to illness or injury and have been signed off by your GP.
"Often it's the more everyday issues that stop people working. Someone might break a leg falling down the stairs, develop a back problem, or struggle with their mental health. These situations can have a huge impact on your finances, yet they may not be covered by a critical Illness policy. "Income protection insurance can help you to continue paying your bills and managing everyday living costs while you’re unable to work."
The story below highlights how easily income protection insurance can be overlooked, even by people who already have cover in place.
During a routine review of an existing policy, a self-employed business owner mentioned that they had been diagnosed with thyroid cancer several years earlier and had spent time away from work. They had never made a claim and weren't sure whether they would still be eligible for a claim payment under their policy.
LifeSearch’s Claims Handler, Lisa Kelly, worked closely with the customer to understand their circumstances. Given the length of time that had passed, gathering evidence and the details needed for the claim was challenging. Despite this, Lisa helped navigate the process with the insurer, who agreed to make a payment of £8,000 (equivalent to two months of the customer’s salary).
Reflecting on the outcome, the customer said:
"Thanks again for all your efforts in helping achieve a fair outcome. I probably wouldn't have pursued the claim if it wasn't for your proactive approach and follow-up. You are a huge credit to your company."
This case highlights not only the value of having income protection insurance in place, but also the importance of regularly reviewing existing cover and seeking guidance when circumstances change. Sometimes, a simple con
Although awareness is improving, Anthony still comes across several recurring myths that prevent people from considering income protection insurance.
One of the biggest misconceptions surrounding income protection insurance is that it only pays out for serious or permanent conditions.
Research from LifeSearch and HomeOwners Alliance found that more than a third (36%) of homeowners believe income protection insurance would only help with permanent or very serious conditions.
In reality, many claims relate to health conditions that are common and often temporary, but still prevent someone from working.
"People often think they have to suffer something catastrophic before a policy would pay out. In reality, many claims arise from situations such as musculoskeletal injuries, mental health conditions, recovery from surgery, or illnesses that require time away from work."
The conversation around mental health has evolved significantly in recent years, yet awareness of how income protection insurance supports mental health conditions remains surprisingly low.
Research from LifeSearch and HomeOwners Alliance found that 26% of homeowners incorrectly believe income protection insurance doesn’t cover conditions such as anxiety or depression. Nearly half (48%) simply don't know whether these conditions could be covered.
"Mental health is one of the clearest examples of why income protection insurance is so important. Many people understand the impact a mental health condition can have on day-to-day life, but don't realise it can also affect their ability to work and earn an income. As conversations around mental health continue to become more open, awareness of the support income protection insurance may provide is likely to grow too."
A common misconception Anthony often hears is the belief that only the highest or main earner needs income protection insurance.
And the data backs this up. The research by LifeSearch and HomeOwners Alliance found that nearly one in five (18%) homeowners believe only the main earner needs this type of cover.
In reality, many households depend on two or more incomes to cover essential expenses such as mortgages, childcare, food and utility bills.
"Household finances are rarely built around one income alone anymore. For many families, the loss of either income would create a financial challenge very quickly."
Many people take comfort in the fact that they receive sick pay through their employer. But not everyone knows how much they would receive, how long payments would continue or whether employer support would be enough to cover their usual outgoings.
Employer support varies significantly. While some organisations provide generous long-term sick pay arrangements, many offer only limited support before reducing payments or moving to Statutory Sick Pay.
"A lot of people don't know exactly what support they'd receive if illness or injury stopped them working. It's worth checking how much sick pay and other benefits your employer provides, how long they last, and whether there are any gaps."
Understanding your workplace benefits is an important first step and you should consider whether those benefits would provide enough support if you're off work for months rather than weeks.
Another common barrier is human nature and our tendency to underestimate the chance of illness or injury affecting our ability to work.
"The human mind is hardwired to believe nothing bad will happen to us. Otherwise, we'd probably never leave the house."
Anthony also finds that people often assume income protection insurance will be expensive before they've explored the options available to them.
“Often, when customers say they don't need it, what they're really expressing is uncertainty about cost rather than a clear understanding of what cover is available. The challenge is that illness or injury can affect anyone, regardless of age, occupation or lifestyle. When it happens, the impact is often felt not just physically and emotionally, but financially too.”
While income protection insurance is still less familiar than other forms of cover, understanding is gradually increasing.
Anthony believes one reason awareness has lagged is that people often form their views based on conversations with friends and family. If someone they know has life insurance or critical illness cover, they may assume those products provide the solution for every situation where they might be unable to work.
The good news is that awareness is improving. Industry initiatives such as Income Protection Action Week have helped put greater focus on the value of protecting earnings, while advances in technology are making information easier for consumers to access.
"The work being done to increase understanding has been brilliant. More advisers are engaging with income protection insurance than ever before."
Anthony also believes AI-powered search tools are helping people discover more detailed and relevant answers to financial questions.
"If someone asks an AI tool where they can get cover if they're unable to work due to illness, I believe they're more likely to be introduced to income protection insurance than they would have been through traditional search methods."
As Anthony points out, most people already insure the things their income pays for. Taking time to understand how income protection insurance works could help provide greater financial confidence if illness or injury ever prevents you from working.
Learn more about income protection insurance and how it could fit into your financial plans. If you'd like to discuss your options, a LifeSearch adviser can help you understand the cover available and what may be right for your circumstances. You can also learn more about Anthony and his role here.
Find out about the latest HomeOwner Survey, conducted by HomeOwners Alliance in partnership with LifeSearch and others, revealing key findings about mortgage protection and financial resilience.
What would happen to your finances if you were suddenly unable to work? For most people, the answer is sobering. Income protection insurance is there to stop that from happening.
Gaps in understanding leave millions of homeowners financially exposed if illness or injury strikes.