Income protection

Income protection is a bit like you own private sick pay. If you get sick or injured and signed off work, an income protection policy will provide you with a regular income. They can pay you 50%-70% of your regular income and be used to pay your mortgage and other expenses.

The income is paid until you are well enough to return to work, you die or the end of the income payment period. Payment periods vary from 1 year to ending when you reach age 70 to fit your needs and budget.

Income protection guide

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Is income protection insurance worth it? Read our guide to find out.

Should you consider income protection?

Income protection protects your biggest asset – your income – it provides financial reassurance if you are unable to work and your income stops.

It can make all the difference so you can stay in your home, maintain your current standard of living and not be financially dependent on anyone else if your health prevents you from earning a living.

We don’t want anyone to be battling serious health problems and facing financial disaster as they can’t afford to pay their mortgage and bills.

In Legal and General’s 2020 Deadline to the Breadline report, they found that the average family is only 24 days away from the breadline which is far shorter than the 90 days they believe.

Although many people believe their employer will look after them, the reality is often very different with them looking to minimise the cost of their payroll. Statutory sick pay is less than £100 per week so that is unlikely to be enough to pay your bills.

What we do

  • Assess if income protection is advisable for you, how much income you need and for how long
  • Discuss all your options and consider what policy would be best for your needs
  • Provide fee-free, impartial advice – we get paid by your insurer once you take out your policy

FAQs

Income protection offers security should you get sick and have to take time off work. Here are a few questions to consider… 

  1. If you got sick, how long could you pay your mortgage and other costs of living?
  2. If you’re employed, how long will your employer pay you sick pay?
  3. If you have savings, how long would they last and how would you feel spending your nest egg? 
  4. If there are two working adults in your household and one of you lost your income could you manage financially?

It depends on your point of view. It costs more than life cover because you’re more likely to be signed off work with ill health than to die.

The cost of income protection will depend on several factors, including your age, your current income, your job, your medical history and your lifestyle. The insurer will take all this into account before working out your premium. How long you are signed off work before you become eligible to receive the income also makes a big difference. This is known as the deferred period and often ties in with how long an employer pays sick pay.

No, you don’t need to pay income tax on any income you receive from the policy.

The UK benefits system is changing. People who can’t work because of illness or disability, are unemployed, or have a low income are supported with Universal Credit, rather than a number of different benefits. For every £1 of income you receive in unearned income, which includes income from an income protection policy, your maximum Universal Credit payment will be reduced by £1. 

The problem for many people is that Universal Credit won’t provide enough income to cover their basic monthly outgoings. If you live with a partner you need to apply jointly with them and be joint claimants. This means your partner’s income and savings are considered when calculating what you receive. 

If you claim Universal Credit, you have one standard allowance for your household. This payment is reduced if an individual, or one of a couple, has savings of more than £6,000 or receives other income. If an individual or couple has savings of £16,000 or more, they become entirely ineligible for Universal Credit. 

While you might feel you’d be unlucky to be signed off work for more than a year, this does happen. How would you manage after 12 months if you haven’t got better? If your sick pay reduces to half pay after 6 months and this alone might not be enough to cover your mortgage and bills.

No one really knows what’s around the corner. In 2020, both Liverpool Victoria and Legal & General reported that the 3 most claimed for conditions were musculoskeletal, cancer and mental health – common conditions that could affect anyone at any time.

This insurance only provides you with an income if you’re signed off work for medical reasons. If you’re made redundant some insurers offer redundancy insurance, which pays you an income for a limited time. 

Yes, you can. To support a claim, you’ll need to provide evidence of your income, such as your most recent SA302 tax calculation.

Possibly, but your choices might be limited. It’s likely that you’ll need to pay more for your premiums, or the provider may say they won’t pay out if you’re off work because of the condition you have.

It’s important to tell your insurance provider about any medical problems that could affect your claim. If you don’t, they could refuse a pay-out.

The best insurance policy for you will depend on your individual circumstances. Each insurer will consider your age, BMI, occupation, medical conditions and lifestyle factors before calculating your premium.   

Some providers include extra benefits, such as fracture cover, where they pay you a lump sum – typically £1,000- £5,000 – if you fracture a bone. Others include physiotherapy sessions and GP services. 

We can talk you through all your options and find the best policy to suit your situation.

When deciding what type of income protection you need, you should always check with your employer to see what sickness benefits they pay. If, for example, your employer pays you in full for a period, then reduces your sick pay for the next period, ‘stepped’ benefit income protection could be useful.  

This means you can choose two different levels of payment, designed to pay out after different time periods. For example, you could get a lower payment when your sick pay reduces to top you up, which then increases when your sick pay stops. 

Income protection guide

Woman relaxing in sitting room of new house
Is income protection insurance worth it? Read our guide to find out.
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Get an online quote.

Our comparison tool will give you an indication of the level of cover and cost of protection to protect your mortgage and family in as little as 60 seconds.
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Prefer to talk to us?

Our super friendly insurance advisers are always willing to help you get the best protection whatever your budget

Protection for rainy days.

Everyone needs a safety net. To know that things will be ok, even when life gets a bit tough. Our insurance advice can give you that reassurance.

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