Income protection is designed to pay part of your income if illness or injury prevents you from working and you meet the policy definition. It keeps essential bills affordable while you recover.
Unlike life insurance, income protection is intended to support you while you are alive but unable to work. The exact benefit, waiting period and claim definition depend on the policy.
What can income protection help pay for?
The benefit is normally paid to you and can be used for everyday commitments such as:
- mortgage or rent;
- household bills;
- food and family expenses;
- loan repayments;
- childcare; and
- other regular financial commitments.
How much does it pay?
Policies usually insure a proportion of eligible earnings rather than the full amount. Limits, tax treatment and how other income or benefits affect a claim vary, so check the policy terms and obtain advice.
When do payments start?
The deferred period is the time between becoming unable to work and benefit payments beginning. Common options range from a few weeks to many months. A longer deferred period may reduce the premium but requires enough sick pay or savings to bridge the gap.
How long can it pay?
Some policies can pay while a valid claim continues up to the policy end date. Others limit each claim to a specified period, such as one, two or five years. These structures can differ significantly in cost and protection.
What does “unable to work” mean?
The incapacity definition is crucial. A policy may assess whether you can perform your own occupation, a suited occupation or another definition stated in the contract. Do not judge a policy only by price.
Who benefits from income protection?
Income protection is relevant to employed people, the self-employed, business owners and anyone whose household depends on their earnings. The need can be greater where employer sick pay is limited or savings would not cover a long absence.
What affects the cost?
Pricing can depend on age, health, occupation, smoking status, benefit amount, deferred period, claim-payment term, policy end age and options such as increasing cover.
Physically demanding or hazardous occupations can be assessed differently. Give accurate information about duties, not only the job title.
How is it different from critical illness cover?
Income protection pays for a wide range of illnesses or injuries that prevent work, subject to the policy definition. Critical illness cover normally pays a lump sum only after diagnosis of one of the specified conditions meeting its definition.
Read how critical illness cover works, or compare income protection and critical illness cover directly.
What should you check before choosing a policy?
- the incapacity definition;
- the deferred period;
- the maximum monthly benefit;
- how long each valid claim can be paid;
- whether the benefit can increase;
- exclusions and medical underwriting;
- how employer sick pay and other income interact; and
- whether the premium is guaranteed or reviewable.
Frequently asked questions
Can self-employed people apply?
Yes, subject to eligibility and evidence of income. The way earnings are assessed should be explained before applying.
Does it cover redundancy?
Standard income protection is designed for incapacity caused by illness or injury, not ordinary redundancy. Separate products or benefits may work differently.
Can I have cover if my employer provides sick pay?
Potentially. The deferred period can sometimes be aligned with the employer benefit, subject to the insurer’s limits and policy terms.
Will it cover an existing condition?
The insurer will assess health information and may offer standard terms, apply exclusions or other terms, postpone or decline cover.
Protect the income your household relies on
Tell us about the income and commitments you want to protect. A regulated adviser from Tailored Life Solutions Ltd can explain relevant options and help you compare the details that matter.
Start your no-obligation enquiry
See the size of your income gap.
Use our free calculator to compare essential monthly costs with sick pay, see what happens when sick pay ends and estimate how far your savings will stretch.
This guide provides general information and is not personal financial, tax or employment advice. Benefits, definitions, exclusions, eligibility, underwriting and policy terms vary. ActiveJoe itself does not provide financial advice; regulated advice is provided by Tailored Life Solutions Ltd advisers.