Choosing the Right Income Protection
Your guide to replacing your salary when illness or injury threaten your income.
A back-up plan for your income
Income protection is an insurance policy that pays you a regular income if you're unable to work due to illness or injury. It's designed to help you keep on top of bills, rent or mortgage payments, and everyday expenses while you're getting back to your old self.
How to pick the right policy
Everyone's circumstances are different, so finding the right cover means asking the right questions.
Know what you're covered for
Income protection doesn't cover every situation - so be clear on what’s included.
- Short-term vs long-term cover: Short-term policies pay out for a fixed period (usually 1–2 years), while long-term cover lasts until you can come back to work or retire.
- Injury and illness coverage: Most policies cover a range of physical and mental health conditions, but some exclusions apply - check for things like pre-existing medical conditions.
- Deferred period: This is how long you wait before payments start. A shorter deferred period means quicker payouts, but premiums may be higher.
For example: If you're self-employed and can't work due to a back injury, income protection could cover a percentage of your lost income until you're back on your feet.
Match your lifestyle and budget
Your job, savings, and financial commitments all play a role in what you'll need.
- How much do you need? Work out your essential monthly expenses - like rent, utilities, food, and loan repayments - and make sure your policy covers enough.
- Can you afford it? Premiums vary by age, health, job risk, and level of cover. Find a balance between full protection and the monthly cost.
- Do you have sick pay? If your employer offers enough sick pay, you might choose a longer waiting period to reduce your premiums.
For example: A teacher with six months' sick pay might opt for a policy with a 26-week deferred period, which lowers the cost while making sure there's income after the support runs out.
Summing up
If life takes a turn, income protection can give you peace of mind that your finances are covered. By choosing a policy that matches your needs and budget, you're building a strong financial backup that keeps the stress at bay.
Frequently Asked Questions
Is income protection the same as critical illness insurance?
No, they're different. Income protection pays you a regular monthly income if you can't work due to any medical reason - physical or mental - for as long as needed (depending on your policy). Critical illness cover, on the other hand, pays a one-off lump sum but only for specific serious conditions like cancer, heart attack, or stroke.
How much income protection do I get?
Most income protection policies cover between 50% and 70% of your gross monthly income, tax-free. This is designed to help you keep on top of essentials like your mortgage or rent, bills, and groceries. It won't fully replace your salary, but it helps you avoid financial strain while focusing on recovery and getting back to work.
Can I get income protection if I'm self-employed?
Sure - and for many self-employed people, it's a smart move. If you run your own business or freelance, you likely don't get statutory sick pay or employer benefits. Income protection gives you a reliable backup if illness or injury stops you working. It can cover fixed business expenses and living costs while your work is on pause.
What happens if I come back part-time?
Many policies offer proportionate or rehabilitation benefits, which means they'll keep paying part of your income if you go back to work slowly. So if you're easing back after an illness - say, working 3 days a week instead of 5 - your policy can top up your income to reflect this. Bear in mind that income protection payments can push you over the threshold for state benefits like Universal Credit.
What happens if things go wrong?
If things go wrong with your income protection - such as your insurer going bust or refusing to pay a valid claim - first try to resolve issues through their complaints process. If unresolved, you can escalate to the Financial Ombudsman for a free, independent review. The Financial Services Compensation Scheme (FSCS) may also step in to cover you for the total amount.
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