Income Protection: The Cover Most People Forget

Ask most people what would happen if they couldn’t work for six months, and the honest answer is “I’m not sure.” Income protection answers that question. It pays you a regular, tax-free income if illness or injury stops you earning — so the mortgage still gets paid and life carries on.

Why it matters more than people think

If you fell ill, Statutory Sick Pay is currently a little over £100 a week, and many employers pay full salary for only a limited time. For most households, that’s nowhere near enough to cover the bills. Income protection bridges the gap between what your employer pays and what you actually need.

How it works

• Benefit amount — usually up to around 60% of your gross income, paid tax-free.
• Deferred (waiting) period — how long you wait before payments start (e.g. 4, 8, 13 or 26 weeks). A longer wait means a lower premium.
• Payment period — some policies pay until you recover, retire, or the term ends; cheaper “budget” versions pay for a set period such as two years.

Income protection vs critical illness

They’re easy to confuse. Critical illness pays a one-off lump sum on diagnosis of a specific illness. Income protection pays a regular income for a much wider range of reasons — including illnesses and injuries that aren’t “critical” but still stop you working. Many people benefit from both.

What affects the cost?

Your job (riskier occupations cost more), age, health, the size of the benefit, and — crucially — the deferred and payment periods. Small tweaks to those settings can change the premium significantly, which is where tailored advice pays off.

Your ability to earn is probably your most valuable asset. It’s also the one people are least likely to insure.

We compare income protection across the whole market and help you set the waiting and payment periods to fit your budget and your employer’s sick pay. Free, impartial, no obligation.