Why should you get Income Protection Insurance?
01.
What is Income Protection Insurance?
Every year, over one million people in the UK are unable to work due to serious illness or injury. Income protection insurance is designed to support you financially during these times by replacing a portion of your income when you’re unable to earn.
It’s important to understand the difference between income protection and critical illness insurance. While critical illness cover pays out a one-time lump sum upon diagnosis of a serious condition, income protection provides ongoing financial support for as long as you’re unable to work.
Income protection policies typically pay out until you either return to work, retire, or pass away. Alternatively, shorter-term policies (lasting one or two years) are available at a lower cost and can be ideal for those needing temporary support while recovering.
Previously known as permanent health insurance, income protection ensures that you can still pay your bills and maintain your lifestyle by:
Replacing part of your income if you’re off work due to illness, injury, or disability
Paying out regular monthly benefits until you return to work or your policy term ends
Covering a wide range of medical conditions and scenarios that prevent you from working
If you’re unable to rely solely on savings or statutory sick pay, income protection insurance can offer essential peace of mind and long-term financial stability.
02.
Do I need Income Protection Insurance?
Very few employers offer extended financial support to staff who are off work due to illness or injury. With limited state benefits available, income protection is a vital safety net for anyone of working age. It ensures your income—and your standard of living—is protected if you’re ever unable to work due to accident, illness, or disability.
In the UK, 1 in 4 adults have no savings, often due to high monthly expenses or prioritising debt repayment. If you’re in a similar situation, income protection can provide the financial security you need—helping you cover essential costs and maintain stability during challenging times.
03.
Factors to consider when choosing Income Protection Insurance
- If you’re employed, do you know how long your sick pay would last if you were unable to work?
If you’re self-employed, how would you manage financially if illness or injury prevented you from working? - It’s essential to determine whether you can afford the level of cover you need. Setting your premiums at a realistic, affordable level ensures you’re protected without straining your finances—especially when it matters most.
- We also recommend adding waiver of premium cover to your policy. This means that if you need to make a claim, your insurer will continue paying your premiums on your behalf. This valuable benefit typically only adds a few extra pounds to your monthly cost.
- Where possible, we aim to secure guaranteed premiums for the life of your policy—so your monthly payments won’t increase, regardless of changes to your health or whether you’ve made a claim.
- During our consultation, we’ll also assess the level of sick pay provided by your employer. This is important because income protection policies come with a deferred (waiting) period before payments begin. The longer this waiting period, the lower your premiums will be—so it’s important to align this with any benefits already available through your workplace.
What Income Protection Insurance cover is right for me?
Income protection insurance offers long-term financial security, distinct from critical illness or short-term income cover. It’s designed to support you throughout your working life by paying out a regular income—typically between 55% and 60% of your earnings—if illness or injury prevents you from working. Best of all, these payments are free from income tax.
If you’re unable to work due to sickness or injury, an income protection policy helps safeguard against the financial strain of lost earnings. This cover can be tailored to your needs, offering peace of mind and stability for the duration of your working life. The cost of your policy will depend on several factors, including:
Your job and its associated risk level
Your age
How much of your income you wish to cover
Your current health status
The chosen end date of the policy
The deferred period (the time before payments begin)
Payments typically start once any employer sick pay or other insurance coverage ends. Choosing a longer deferred period can reduce your premium, making the policy more cost-effective.
At Mortgages and Insurers Solutions, we work with trusted providers such as Aviva, The Exeter, and others to find a policy that suits your specific needs. We ensure you have full transparency over your premiums and the flexibility to decide exactly what you’d like covered—giving you control, clarity, and confidence in your financial protection.