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Income Protection Insurance

One of the safest ways to ensure you have a wage coming in when you can’t work.
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Income protection insurance

Income protection insurance replaces some of your monthly income if you are unable to work due to illness or injury. It pays you a tax-free monthly income until you return to work, you retire, or your policy expires.

This type of cover is designed to support you and your family by covering your regular outgoings, to help maintain your lifestyle, should something unexpected happen.

Think about your current sick pay

  • If you're employed, you might have a better arrangement through your employer, but there'll most likely be an expiry date on their support - your employer can also change their terms of sick pay at any time.
  • It's worth thinking about the fact that you might change jobs in the future...what if you new employer doesn't have as comprehensive cover as you do now? You'll also be older, which will mean that getting cover independently will be more costly. The default sickness cover in the UK is Statutory Sick Pay (SSP), which pays just over £100 a week for a maximum of half a year. It’s not much.
  • You might be self-employed and not have such a luxury as sick pay. Income protection can help create a financial safety net and peace of mind.

Why income protection?

We believe everyone should at least consider income protection. Whether you’re young and renting, or have a mortgage and a family, your income is probably the foundation on which life happens and life grows.

If the cashflow suddenly stops as a result of sudden injury or ill health it can put us, our finances, our plans, and the people we care about on the back foot.

How does income protection insurance work?

Once you’ve decided that you need income protection insurance, there are five main choices that you’ll need to make:

  1. Cover level: The amount of benefit you’ll receive each month. You can choose the right level for you, but typically it’s up to 60% of your gross monthly income.
  2. Cover term: How long you’d like to be protected for. This is usually a fixed number of years, say 25, or however many years you think you’ll be in full-time employment.
  3. Benefit term: How long the insurance benefit will be paid if you’re ill and unable to work. Many people want the money to continue until retirement, but you can pick say two or five years if that’s all you need.
  4. Deferred period: How long after you’ve stopped working that you’d like the income protection insurance benefit to start. This product feature can sometimes be a bit confusing, but often people don’t need their insurance to start paying straight away, particularly if they’re employed and they receive sick-pay for a period of time. If you're self-employed however, you might need a short deferred periods as you won’t have financial support from an employer.
  5. Definition of incapacity: This is what qualifies you to start receiving your income protection insurance benefit. The definition that most insurers offer, and probably the simplest, is called ‘own occupation’, which means that if you are ill and can’t do your current job you qualify to start receiving the benefit. Some insurers also offer slightly stricter definitions, like ‘any occupation’, which means that to qualify for your insurance benefit you must not be able to do your current job, or any job at all, if you fall ill. 

Income protection insurance is an extremely useful product for many people, but it can be a little confusing. Request a call back from one of our friendly advisers, who are experts in income protection insurance and will happily take you through the five steps above to work out what cover you need. You can also read our article for more information on how income protection insurance works.

Income protection - Your grace period

After how long off sick should payment start? The answer usually lines up with existing sick pay. If your work offers six months sick pay - pick six months. If you don’t currently get sick pay - pick ASAP.

What ‘unable to work’ means for you

A designer who breaks a leg can still work, a roofer who breaks a leg can’t. This part makes the policy specific to your job, defining sickness/ injury types that’d force you offline.

What does income protection cover?

Illness - If you are signed off work by your GP for any illness, your policy is there for you and will start paying out once your deferment period has ended - it could be anything from anxiety or depression, to a stroke or heart attack.  Income protection extends to any reason you're forced off work sick.

Accident / injury - From car accidents and broken bones, to putting your back out in the gym.  Your policy will start protecting you once your deferment period has ended and if your GP believes you are unable to work.

What isn't covered by income protection?

Death - Income protection doesn't cover you upon death.  Instead, you would need a life insurance policy.

Redundancy - Income protection doesn’t cover redundancy, only health-based absence from work while you’re still employed. Redundancy cover can be bought as part of mortgage protection insurance so if in doubt speak with an expert adviser.

Dismissal - It falls into the same category as redundancy, and isn't covered under income protection.


Do I need income protection?

It's a pretty good idea!  Unlike other protection products like life insurance and critical illness insurance, which are traditionally most suited to people with debts (usually a mortgage) - income protection insurance is a useful solution for nearly everyone.

That’s because most of us earn a regular income and would struggle financially to cover our outgoings if we were unable to work

Ask yourself this:

  • Could you or your family cover your regular outgoings if you couldn’t work?
  • Would you get any financial support from your employer if you went off work sick?
  • Are you entitled to any state support if you couldn’t work due to ill-health?
  • Do you have any savings that you’d be able to use if you couldn’t work?
  • If you lost your income, could you change your lifestyle to reduce your regular outgoings, and would you be happy to do that?,

If your answer to any of these is no, then income protection is a pretty sensible idea.

Planning what if...

When talking income protection, people commonly say three things:

More benefits of income protection

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LifeSearch From our Adviser Team

Unlike other insurance policies, you can claim on income protection as many times as you need over the life of your policy.

Your income protection payments keep coming until one of a handful of things happen:

  • You return to work
  • Your policy term expires
  • Your payment/ claim term expires
  • You leave your job
  • You retire
  • You die

There may be some small print to factor in, so for absolute clarity on an existing or future income protection policy, please speak with a LifeSearch adviser.

How much does income protection insurance cost?

The average cost of an Income Protection policy, to cover you until the age of 65:

Starting Age Cost to cover £1,500 monthly income
£10.13 per month
£11.05 per month
£12.62 per month
£15.32 per month
45 £18.96 per month
£26.30 per month
£36.92per month


*Pricing information obtained 08/06/2023. This data is based on a client with no medical history,  a 3 month deferment period with a 2-year claim period in an administrative role.

Income protection insurance costs vary based on how you earn, what percentage you want to replace, and for how long you want cover to last. It also takes into account the usual factors such as your age, health, occupation and if you’ve any hazardous or high-risk hobbies.

Income protection cost and cover calculator

Our simple calculator can help you to work out what insurance you need and give you estimated costs for different types of life cover. You can then speak to an adviser or buy online.

Get costs & cover ideas

Protect your foundations

Income protection is particularly useful for younger people, renters and those who don’t (yet) have kids.  

While life insurance itself may be unnecessary, income protection firms up the foundations of the life you’re building. It protects your plans; your momentum. 

Your income is probably the bedrock of your life. Protect it and you don’t need to consider downsizing your lifestyle or moving back in with parents. Your savings are safe. You can maintain financial momentum without taking several steps back.

Frequently asked questions about income protection

Easy guides to help you get started

See all our advice & guides

Ready to take the first steps to get protected?

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