What is income protection insurance?

Income protection insurance is designed to pay you a regular income if you’re unable to work due to illness or injury. Unlike critical illness cover, which pays out a one-off lump sum, income protection provides ongoing monthly payments to help replace some of your income.

It’s all about helping you stay financially steady when your health prevents you from earning, so you can focus on getting better without worrying about bills. It won’t replace all your income, but it can go a long way to ensuring you can cover essentials like the mortgage or rent, utilities and food.

You can tailor your income protection to work best for you. Pick the cover you need, decide how long you want to wait before payments kick in. Comparing different providers will help you find a plan that fits both your life and your budget.

Why choose income protection insurance?

If sudden illness or injury meant you couldn’t work, how would you keep up with your mortgage, rent or household bills? Statutory Sick Pay (SSP) is limited to just £118.75 per week for 28 weeks, and many employers only provide additional sick pay for a short period. That’s where income protection steps in.

Having this type of cover can give you reassurance that essential outgoings will be taken care of if your income drops due to illness or an accident. Depending on the level of cover you arrange, it could even give you the flexibility to largely maintain your lifestyle while you recover.

Income protection isn’t just there to top up SSP or employer’s sick pay for employed people. Income protection insurance can also provide a vital safety net if you’re self-employed and have no sick pay benefits to fall back on.

You may want to consider income protection if:

  • You rely on your income to cover everyday expenses.

  • You don’t have substantial savings.

  • Your employer’s sick pay wouldn’t support you for long.

  • You’re self-employed or a contractor with no employee benefits.

  • You want ongoing financial support, not just a one-off payment.

What does income protection insurance cover?

Typically covered

Income protection typically covers most illnesses or injuries that stop you from doing your job. Unlike critical illness cover, it doesn’t just focus on a set list of conditions. Instead, it pays out for a broader range of health issues that prevent you from working, whether temporary or long-term.

This could include:

  • Accidents and injuries.

  • Musculoskeletal problems such as back pain.

  • Stress, depression or other mental health issues.

  • Serious illnesses like cancer or heart disease.

Payments begin once the waiting period (deferred period) you choose when taking out your policy is over. Examples of deferred period options across two of the leading income protection providers include 4, 8, 13, 26 and 52 consecutive weeks of being unable to work.

How long payments continue depends on the provider and policy you choose. Some policies pay for a set period (e.g. up to a year), while others will keep paying all the way until your chosen retirement age, if you continue to be unable to work due to your illness or injury.

As for the level of cover, that will depend on the insurer you choose. Insurers tend to set a maximum based on a percentage of your income, such as 50%, 60% or 65% of your pre-tax earnings. However, some insurers don’t ask how much you earn and you can choose your level of cover between their stated minimum and maximum levels.

What isn’t covered?

While income protection can be a vital safety net, there are limitations. Depending on the terms and conditions of your chosen policy, exclusions can include:

  • Pre-existing conditions: Illnesses or injuries you already had before applying.

  • Pregnancy: Policies typically don’t pay out in the event of a normal pregnancy.

  • Short-term sickness: Policies usually have a waiting period before payments begin.

  • Redundancy or job loss: Income protection only covers illness or injury, not unemployment.

  • Non-disclosure: If you aren’t honest about your health or lifestyle when applying, your claim may be rejected.

  • Missed premiums: If you stop paying your premiums, your cover will end.

Always check the policy details carefully. Each provider has its own list of covered conditions, exclusions and limitations, and specific criteria that will need to be met for a successful claim.

How much does income protection insurance cost?

Your income protection premium will depend on factors like:

  • Your age: The younger you are when you take out a policy, the cheaper your premiums will usually be.

  • Your health: Existing health conditions typically mean premiums are higher.

  • Your lifestyle: Lifestyle choices such as smoking can push premiums up.

  • Your occupation: Occupations considered higher risk usually mean higher premiums.

  • Benefit level: The more of your income you want to replace, the higher the premium.

  • Deferred (waiting) period: This is the time between stopping work and when payments start – a longer deferred period often means cheaper premiums.

  • Guaranteed, increasing or reviewable premiums: Guaranteed premiums stay the same, increasing premiums rise with a link to inflation, and reviewable premiums are reviewed in line with the provider’s stated schedule. Each option will affect the monthly premium.

You may find your own quotes come in cheaper or more expensive than average premiums. The best way to find out how much cover would cost for you is to compare quotes from leading insurance companies.

How to keep costs down

There are ways that you may be able to make income protection insurance more affordable:

  • Start as early as you can: The younger you are when you take out a policy, the lower your premiums are likely to be.

  • Choose the right level of cover: Look at your wider financial situation, such as any sick pay, savings, property or investments.

  • Pick a longer deferral period: If you could rely on savings or employer sick pay for a few months, setting a longer waiting period can cut premiums.

  • Be healthy: Insurers typically offer lower premiums to people who maintain a healthy lifestyle. Stopping smoking, eating well and managing any chronic health conditions may trim pounds off your premiums.

  • Review your cover: If your circumstances change you might not need as much cover. You may be able to amend your policy, or cancel it and take out a cheaper one.

  • Shop around and compare quotes: Each insurer has its own pricing model, so it’s essential to compare quotes before committing to a policy. Don’t settle for the first quote you receive; it’s always worth exploring your options.

By making a few smart choices, you can reduce your premiums without compromising on the protection you need.

Things to consider

Income protection insurance can offer real peace of mind. But it’s important to understand how it works and what to watch out for, so you can choose the right cover with confidence:

  • Payments won’t usually cover 100% of your salary.

  • Payments are tax-free, but could affect your entitlement to state benefits.

  • Make sure your chosen deferred period aligns with how long you could manage without income.

  • Keep up your premiums, as missing payments could mean losing your cover.

  • Be honest about your health and lifestyle as inaccurate information could void your policy.

If you’re unsure about whether income protection insurance is right for you, seeking advice from a qualified financial adviser can help ensure you’re making the right decision.

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Page updated on 10th October 2025, Reviewed by Richard Groom