Income Protection

Your income supports almost every aspect of financial stability, from mortgage payments and household bills to long-term financial plans.

Income protection is designed to provide a regular monthly benefit if illness or injury prevents you from working, helping you maintain financial commitments while you recover.

Rather than paying a lump sum, the policy replaces a proportion of your income until you return to work or reach the end of the policy term.

How Income Protection Works

Income protection policies are structured around your earnings and financial commitments.

You select the proportion of income you wish to protect, typically up to around 50–65% of gross earnings depending on insurer limits.

A deferred period is also chosen. This is the length of time you wait before the policy begins paying a benefit and is often aligned with employer sick pay or Statutory Sick Pay so that cover begins when other income stops.

If you are unable to work due to a qualifying illness or injury and the claim is accepted, the insurer will pay a regular, tax-free monthly benefit until you return to work or the policy reaches its agreed end date.

When Income Protection Is Relevant

Income protection is particularly important for individuals who rely on their earnings to meet ongoing financial commitments.

This may include mortgage payments, household bills and general living expenses. It is often especially relevant where savings are limited, employer sick pay is restricted or where an individual is self-employed and receives no formal sick pay.

Statutory Sick Pay provides a limited level of support for a fixed period and may not be sufficient to maintain long-term financial stability.

Policy Structure

Income protection policies can be structured in several ways depending on individual circumstances.

The definition of incapacity is an important factor, with “own occupation” policies generally providing the strongest level of cover. Under this definition, a claim may be paid if you are unable to perform the duties of your specific occupation.

Policies can also be arranged with guaranteed premiums, which remain fixed for the duration of the policy, or reviewable premiums, which may change over time.

Benefits may be structured as level cover, where the monthly benefit remains fixed, or index-linked cover, where the benefit increases in line with inflation.

Cost

The cost of income protection will depend on factors such as age, health, occupation, smoking status, the level of income insured, the deferred period and the chosen policy term.

Longer deferred periods and lower benefit levels will generally reduce premiums.

Policies are structured carefully to balance affordability with the level of financial protection required.

When Income Protection May Not Be Necessary

Income protection is not required in every situation.

Some individuals may already have comprehensive employer sick pay arrangements or substantial savings that could support their financial commitments during a prolonged absence from work.

Others may have alternative financial support structures that reduce the need for long-term income replacement.

For this reason, we review existing sick pay arrangements, savings and financial commitments before recommending any policy. The objective is to ensure protection is appropriate and proportionate rather than unnecessary.

As with all insurance policies, terms, conditions and exclusions will apply.

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    Questions?

    FAQ

    Got a question about income protection?

    As directly authorised advisers, we are not restricted to a limited insurer panel. We assess the available options and recommend cover suited to your needs.

     

    Statutory Sick Pay provides a limited level of income for a fixed period and is often significantly lower than most people’s regular earnings.

    For many households, SSP alone may not be sufficient to meet mortgage payments and other essential financial commitments.

    Income protection is designed to replace a proportion of your income for a longer period, depending on the policy selected. This can provide greater financial stability if you are unable to work due to illness or injury.

    As standard, providers will cover up to 65% of your annual salary which is then broken down into a monthly benefit. You don’t have to have this amount of cover and can decide on a set benefit amount.

    Savings can provide useful short-term support. The key consideration is how long those funds would realistically last if you were unable to work for an extended period.

    Income protection is designed to provide ongoing monthly income replacement, which may be particularly relevant in the event of a long-term illness or injury lasting several years.

    Rather than depleting savings intended for other goals, income protection can provide a structured source of income while you recover.

    Employer sick pay can provide valuable short- to medium-term support, although the duration and level of cover varies between employers.

    Many schemes provide full pay for a defined period (e.g. 3, 6 or 12 months), after which payments may reduce or cease.

    Income protection can be structured to begin once employer sick pay ends, helping to provide continued income if you are unable to return to work.

    Critical illness and income protection serve different purposes.

    Critical illness cover pays a one-off lump sum if you are diagnosed with a specified serious condition that meets the policy definition.

    Income protection, by contrast, provides a regular monthly benefit if you are unable to work due to illness or injury — typically under an “own occupation” definition, depending on the policy selected.

    The key differences are:

    • Trigger — Critical illness pays on diagnosis of defined conditions. Income protection pays if you are medically unable to work.

    • Payment structure — Critical illness pays a lump sum. Income protection pays a monthly income.

    • Claim frequency — Income protection can potentially be claimed more than once over the policy term, subject to conditions.

    The two policies can complement each other depending on your objectives and financial commitments.

    Family and friends may be able to provide short-term assistance, but long-term financial support can be difficult and uncertain.

    Income protection is designed to provide a structured monthly benefit if you are unable to work due to illness or injury, reducing the need to rely on others.

    The aim is financial independence during recovery, particularly where absence from work may be prolonged.

    Yes.

    Income protection is available to both employed and self-employed applicants, although underwriting and income assessment may differ.

    For self-employed individuals, insurers will typically assess average earnings over a set period (often the last 1–3 years) and may request supporting financial documentation.

    Occupation risk, industry type and income stability will all be considered when determining terms.

    Often it is, although terms may vary. Insurers may adjust premiums, apply exclusions or request additional medical information.

    Income protection is typically most relevant if you rely on employed or self-employed income to meet your financial commitments.

    Arranging cover while you are healthy and actively working generally provides access to a wider range of options and more competitive terms.

    The key consideration is whether you could maintain mortgage payments and essential costs if your income were to stop for an extended period.

    In many cases, yes.

    Insurers typically apply higher premiums to applicants classed as smokers, as this can increase health risk.

    However, pricing will also depend on other factors, including age, medical history, BMI, occupation and the level of cover selected.

    Each application is assessed individually.