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Why you need income protection insurance

LifeSearch author Katie Crook-Davies
4 min read

by Katie Crook-Davies, Protection Writer

See author bio

Katie works with insurers and distributors to make protection propositions more accessible, pricing more transparent and marketing messages more simple.See author bio

Guide last reviewed 10 Oct 2023

Do you ever think about how you would cover your monthly bills if you fell ill and couldn’t work? Possibly not. Not many of us do because it’s one of those things that no one really likes to think about. But did you know that there’s an insurance product called income protection insurance that can replace your income in this situation? We think more people should know about this product, so here we explain what it does and why you need it.


What is income protection insurance?

Income protection insurance is designed to help you and your family cover your regular outgoings and maintain your lifestyle, should illness strike and you become unable to work. The product pays a tax-free monthly benefit, usually up to 60% of your gross monthly income, while you recover and get back on your feet, and keeps paying until you return to work, your policy comes to an end, or you retire.

Do I need income protection insurance?

For most, the answer to this question is ‘yes’, but many simply don’t realise that they need it. We look at the top five reasons why people don’t buy income protection insurance, and why it might be time to rethink:

  • I won't fall ill

No one likes to think about illness. We know that it happens, but many of us don’t think it’ll happen to us. But it can, in fact, a 35-year-old female has a 34% chance of falling ill and being unable to work for two months or more [1]. That’s not an insignificant percentage. What would happen if you were in the 34%, could you survive financially?

35-year-old woman, non-smoker, faces the following risks before retirement (65) [1]: 

  • 4% chance of death
  • 11% chance of suffering a serious illness
  • 34% chance of being unable to work for two months or more
  • I can use my savings

Savings can act as a great buffer, but worryingly 42% of employed adults believe they could only survive a month or less on their current level of savings [2]. How long would your savings last? And the more important question might be, would you actually want to use your savings? Income protection insurance protects you financially against the chance of falling ill and being unable to work, so your savings can stay exactly where they are. 

  • My employer will support me

Many people overestimate the financial support available from their employer. Most employees are entitled to Statutory Sick Pay of £109.40 per week for 28 weeks [3], but what do you get in addition to this? Would you need additional support, or would £109.40 per week be enough for you and your family? Often sick pay is discretionary and tends to be looked at on a case-by-case basis by employers, which doesn’t provide too much certainty for you. On the other hand, self-employed individuals have no employer support, so for them, income protection insurance becomes an extremely important product.

  • I already have illness insurance

You may already have a critical illness insurance policy which pays out a tax-free lump sum amount of money if you fall ill with one of the conditions covered by your policy. This money can be used as you like and could replace your income if you were unable to work. There are however a couple of key differences between income protection insurance and critical illness insurance that it’s worth knowing about:

  1. Once a critical illness insurance policy has paid out the full cover amount, the policy will come to an end, so you won’t be protected against future illness. Income protection insurance, on the other hand, allows you to make multiple claims on the same policy.
  2. To claim on a critical illness policy you need to meet the definition of one of the illnesses covered. It’s easier to claim on an income protection policy because you simply have to be unable to work and signed off by a medical professional, and that can be because of any illness or injury.
There are lots of things to factor in when deciding if you need income protection insurance so why not request a callback from one of our specialist advisers. We can work out exactly what you need, allowing for any savings that you’re happy to use as well as any existing employer support, financial support from the government, and any other insurance you have in place.
  • I don't have a family that depends on me financially

Unlike life insurance, which is designed to help protect families financially in the event of losing a loved one, income protection insurance is designed for 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. Income protection insurance means that even if your health changes, nothing else has to.



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LifeSearch author Katie Crook-Davies
Katie Crook-Davies Protection Writer
Katie is an independent insurance consultant who is passionate about protection and wants to share that passion with others through engaging marketing content. She hopes that one day people will get as excited about protecting themselves and their loved ones, as she does!
See all articles by Katie Crook-Davies
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