Short-Term Income Protection Insurance Explained

Short term income protection is an insurance policy that pays you a regular, tax-free income for a fixed period, typically 6 months to 2 years, if you're unable to work because of illness or injury. Unlike long-term income protection, which can pay out all the way to retirement age, short-term cover is designed as a stop-gap: it bridges the period between your income stopping and either your recovery, your return to work, or the point where a longer-term safety net (savings, a partner's income, or a separate long-term policy) takes over.

You choose a benefit period when you take out the policy, usually 12 months or 24 months, and a deferred period (also called a waiting period) of 4, 8, 13 or 26 weeks before payments start. The shorter the deferred period, the higher your premium, because the insurer is taking on more risk of an early claim. Most short-term policies use simplified or moratorium underwriting, meaning you answer fewer medical questions upfront than with long-term cover, which keeps the application quicker and the price lower. These deferred period and benefit period mechanics are common across every type of income protection product, not just the short-term version.

Short term income protection covers you if you're signed off work due to accident or illness, from a broken leg that keeps you off site for 10 weeks to a longer illness like a slipped disc or post-surgery recovery. Most standard policies are sickness and accident only, but some insurers sell an enhanced version, often marketed as ASU (Accident, Sickness and Unemployment) cover, that adds a redundancy trigger on top. This distinction matters because it changes both what you're covered for and how much you pay.

• Accident cover: Pays out if an injury, from a workplace accident to a sports injury, leaves you unable to do your job during the deferred period and beyond.
• Sickness cover: Pays out for illness-related absence, including mental health conditions, back problems and post-operative recovery, provided the condition isn't excluded at application.
• Redundancy add-on (ASU only): Some short-term policies bolt on unemployment cover, typically paying out for up to 12 months if you're made redundant, though this is usually capped and excludes voluntary resignation.
• What's not standard: Pure short-term sickness and accident policies do not cover redundancy or unemployment unless you've specifically selected the ASU version.

The core difference between short-term and long-term income protection is how long the policy keeps paying if you remain unable to work. Short-term policies stop paying after a fixed benefit period, usually 12 or 24 months, even if you still can't return to work. Long-term policies, by contrast, can keep paying until you recover, retire, or reach the policy's end date, which is often your state pension age. That extra depth of cover comes at a price: long-term policies generally cost 2 to 3 times more than an equivalent short-term policy for someone in their 30s or 40s, because the insurer is underwriting a much longer potential claim.

Underwriting also differs. Short-term policies typically use simplified or moratorium underwriting, a lighter medical questionnaire that excludes pre-existing conditions for a set period rather than assessing them in detail upfront. Long-term policies more often use full medical underwriting, which can involve GP reports and a longer application, but gives you clearer certainty about what is and isn't covered from day one. If you're weighing up which route suits your circumstances, our full guide to the different types of income protection breaks down every variant, including guaranteed and reviewable premium options, in more depth.

These three terms get confused constantly, and the confusion costs people money. Short-term income protection is a standalone insurance policy you buy directly, unconnected to any loan or credit agreement, that pays a tax-free income if you're too ill or injured to work. PPI (Payment Protection Insurance) was a different product entirely: it was sold alongside a specific loan, credit card or mortgage to cover the repayments on that debt if you lost your job or fell ill, and it was widely mis-sold in the UK before claims closed in August 2019. ASU (Accident, Sickness and Unemployment) cover sits between the two: it's usually a standalone or mortgage-linked policy that combines short-term income protection with redundancy cover, but it typically pays for a shorter period, often 12 months, and has more exclusions around pre-existing employment issues than a dedicated income protection policy.

If you already searched for PPI and landed here, you almost certainly want either a standalone short-term income protection policy or an ASU policy, not a PPI claim. Read our dedicated breakdown of how income protection differs from PPI for a full side-by-side comparison, including why PPI is no longer sold as new business.

Short-term income protection works on a simple sequence: you fall ill or get injured, you serve your deferred period, then the insurer pays you a monthly tax-free income until either you return to work or the benefit period ends, whichever comes first.

1. You stop working due to a covered accident or illness and notify your insurer as soon as reasonably possible.
2. You serve the deferred period, typically 4, 8, 13 or 26 weeks, during which no benefit is paid. Many people time this to match their employer's sick pay or savings buffer.
3. Payments begin once the deferred period ends and your claim is approved, usually calculated at 50% to 65% of your gross income.
4. Payments continue monthly, tax-free, for as long as you remain unable to work, up to the benefit period you chose, commonly 12 or 24 months.
5. Cover ends when you return to work, the benefit period expires, or the policy term ends, whichever happens first.

Here's a worked example: someone earning £30,000 a year taking out a policy covering 60% of income, with a 4-week deferred period and a 12-month benefit period, would typically receive up to £1,500 a month tax-free once payments start, continuing for up to 12 months if they remain unable to work. For the full mechanics, including how insurers assess claims and calculate benefit amounts across every type of policy, see how income protection works in detail.

Short-term income protection typically costs less than long-term cover because the insurer's maximum liability is capped at your chosen benefit period rather than running for years or decades. For a healthy non-smoker in their mid-30s, premiums for a 12-month benefit period often start from around £9 a month, rising to roughly £13 a month for a 24-month benefit period on the same income. Price is driven by four main factors: your age, your occupation (manual trades cost more to insure than office-based roles), your chosen deferred period (shorter waits cost more), and whether you add the ASU-style redundancy option.

The table below shows typical monthly premiums by age band and benefit period length, based on a non-smoker taking out £1,500 a month of cover. Actual quotes will vary by insurer, occupation and health history, so treat these as a starting point rather than a guaranteed price. For a full breakdown of every cost driver across all income protection products, including how smoking status and occupation class affect price, read our full breakdown of income protection costs, or use our income protection payout calculator to estimate your own cover and monthly benefit.

Short-term income protection suits anyone who wants a safety net for a defined period rather than lifetime cover, usually because their risk window is shorter or their budget is tighter. It's a particularly good fit if you fall into one of the groups below.

• Self-employed workers with no sick pay: If you don't work, you don't get paid, so even a 12-month policy can be the difference between keeping up mortgage payments and falling into arrears during recovery. See our dedicated guide to income protection for the self-employed for cover designed around variable income.
• Employees on probation or short contracts: Statutory Sick Pay only kicks in once you've been continuously employed and earning above the lower earnings limit, and many contractual sick pay schemes don't apply during probation, leaving a genuine gap.
• Mortgage holders wanting a cheaper stop-gap: If your main worry is covering 6 to 12 months of mortgage payments rather than insuring your income for decades, a short-term policy costs a fraction of long-term cover.
• Those with some savings already: If you've got 2 to 3 months of expenses saved, a short-term policy with a longer deferred period, matching your savings runway, can cost significantly less than one that pays out immediately.

Like all insurance, short-term income protection has exclusions, and understanding them before you buy avoids a declined claim at the worst possible moment. The most common exclusions are consistent across most UK insurers, though exact wording varies by provider.

• Pre-existing conditions: Under moratorium underwriting, any condition you've had symptoms, tests or treatment for in the 2 to 5 years before the policy started is typically excluded, at least for an initial period. Our guide to cover for pre-existing conditions explains how insurers assess disclosure and what can change over time.
• Self-inflicted injury: Claims arising from self-harm, or injuries sustained while committing a criminal offence, are excluded on virtually every policy.
• Non-disclosure: If you fail to disclose relevant medical history or lifestyle facts, such as smoking status or existing conditions, at application, the insurer can void the policy or decline the claim even years later.
• Unemployment without ASU: Standard short-term income protection does not pay out if you're made redundant or resign, unless you specifically bought the ASU version with a redundancy add-on.

Individually owned short-term income protection payouts are tax-free. Because you pay the premiums yourself out of taxed income, HMRC treats the monthly benefit as a return of insurance, not earnings, so no income tax or National Insurance is due on what you receive. This is one of the most valuable and least understood features of the product: a £1,500 monthly payout is £1,500 in your pocket, not a gross figure to be taxed down.

The position changes if your cover comes through an employer-arranged group income protection scheme rather than a policy you own personally. Because the employer pays the premiums, often as a business expense, and the payout is usually made through payroll as a continuation of salary, HMRC generally treats group scheme payouts as earnings, meaning income tax and National Insurance apply in the normal way. If you're comparing the two routes, it's worth checking with your employer or a qualified adviser exactly how any workplace scheme is structured, since the tax treatment materially changes the real-terms value of the cover.

Making a claim on short-term income protection follows a broadly similar process across UK insurers, though timelines and paperwork vary slightly by provider.

1. Notify your insurer promptly, ideally within the timeframe set out in your policy documents, usually as soon as you know you'll be off work for longer than a few days.
2. Provide medical evidence, which usually means a GP or specialist report confirming your condition and expected recovery time. Some insurers also request a claim form completed by your employer if you're employed.
3. Serve out the deferred period you selected when you took out the policy, during which no benefit is paid even though your claim may already be approved.
4. Receive your first payment shortly after the deferred period ends, assuming the insurer has accepted the claim, typically paid monthly from that point.
5. Attend ongoing reviews, which may include follow-up medical evidence or a call with a claims case manager, particularly as you approach the end of your benefit period.

For a complete walkthrough of documentation, common reasons claims get delayed, and what to do if a claim is declined, read our full guide to how to make an income protection claim.

Short-term income protection is a genuine trade-off between cost and depth of cover, and weighing both sides properly before you buy avoids disappointment later.

• Lower premiums: Because the insurer's maximum exposure is capped at 12 or 24 months, short-term policies typically cost 40% to 60% less than equivalent long-term cover.
• Simpler underwriting: Moratorium-style applications are quicker to complete and usually don't require a GP report, so cover can start faster.
• Flexible benefit periods: You can match the policy length to a specific risk window, such as a mortgage term or a fixed period of self-employment.

• Cover ends even if you're still unwell: If you haven't recovered by the end of your benefit period, payments stop regardless, which can leave a second income gap.
• Less certainty on pre-existing conditions: Moratorium underwriting can exclude conditions that a fully underwritten long-term policy might have covered outright.
• Premiums can rise on renewal: Some short-term policies are reviewable rather than guaranteed, meaning your premium can increase at renewal based on age or claims experience.