If you could not work because of illness or an accident, how would you pay the mortgage, the council tax and the bills? For most people savings would not last long. Income protection cover pays you a monthly income for as long as you are signed off work through sickness or injury, until you can go back, the policy ends or you retire.
Income protection insurance (sometimes known as permanent health insurance) is a long-term insurance policy designed to help you if you cannot work because you are ill or injured. It ensures you continue to receive a regular income until you retire or are able to return to work. This type of insurance is particularly popular with self-employed clients who do not receive sick pay.
Income protection insurance pays out a regular tax-free income if you are unable to work due to illness or injury. Unlike statutory sick pay, which is limited and time-restricted, income protection can replace a significant portion of your monthly salary, helping you keep up with your mortgage, bills and everyday outgoings while you recover.
Self employed workers, people without a generous employer sick pay scheme and anyone with a mortgage or other big commitments should think about income protection first. Long term illness and injury are more common than most people expect, and the cost of being off work for months can build up quickly without the right cover.
We compare income protection from leading insurers across the whole of the market and advise on the right deferred period, benefit level and policy term for your circumstances. You do not pay us a fee for protection advice, and we help clients in Romsey, Southampton and across the UK.
Related protection advice:
Income protection works well alongside other forms of cover. Find out more about life insurance, critical illness cover insurance and buildings and contents insurance, or visit our main mortgage protection insurance page.
This depends on the amount you select at the start of the policy. The benefit pays out a percentage of your earnings, typically between 50% and 70%, as income protection is not designed to make you better off than if you were working. The monthly benefit is paid as a tax-free amount into your account each month. As with all insurance policies, conditions and exclusions will apply.
Policy Term
The term of the policy is specified at the outset. In simple terms, it means how long you are protecting yourself, for example 1 to 50 years. The term is often decided by the following:
Mortgage term: If your main purpose is to protect your mortgage repayments then the income protection policy usually coincides with your mortgage term. So however many years your mortgage runs, the income protection covers the same period.
Dependents: Taking the policy to an age where your children are financially independent, for example 18 after school or 23 after university, ensures your family's lifestyle would not be impacted if you were unable to work during those years.
Retirement age: Make sure your income is protected should the worst happen, by taking the policy to retirement age, at which point your pension takes over as your main income source.
Self-employed: For self-employed individuals, income protection is especially important as there is no company sick pay. Our advisers can help you set the right deferred period and benefit level to match your personal financial position.
Deciding which income protection cover type is suitable for you and your family can seem challenging, however we are here to help and guide you. Whether you want full comprehensive cover, a lower-cost option, or inflation-linked protection, there are three types to choose from:
Pays out until you can return to work, the policy ends or you retire, however many claims you make. It costs the most but gives the strongest protection for long illnesses.
Pays out for a set period on each claim, usually one, two or five years. It costs less, and most people who are off work long term go back within that time, but it does leave a gap for the most serious illnesses.
The monthly benefit, and usually the premium, goes up each year in line with inflation, so the income you are protecting keeps its value over a long policy.
Good to know: The deferred period is the gap between when you stop being able to work and when your income benefit begins. It is typically 4 to 12 weeks. A longer deferred period usually reduces the monthly premium, so it is worth considering how long your savings or employer sick pay would last before the policy needs to pay out.
Back to work support: Many income protection policies include back-to-work support services to help you return to work as soon as you are ready. This can include access to physiotherapy, counselling, and occupational health advice, helping you to recover and get back on your feet more quickly.
Rehabilitation services: Some policies include access to specialist rehabilitation services such as physiotherapy, occupational therapy and expert medical second opinions to support your recovery.
Hospital benefit: Some income protection policies include a hospital benefit that pays a daily or weekly amount for each night spent in hospital, in addition to the standard income replacement benefit.
Fracture cover: Fracture cover pays you a lump sum if you suffer one of the specified fractures during any 12-month period. Most insurance companies will pay one successful claim each policy year.
Income protection cover pays you a monthly income if illness or injury stops you working. These are the choices that decide how well a policy works for you.
This is how long you wait before the policy starts paying, usually 4, 8, 13, 26 or 52 weeks. Match it to your sick pay or savings. If your employer pays you in full for 6 months, a 26 week deferred period can cut the premium a lot.
Most insurers cover between 50% and 70% of your gross income, because the payout is tax free on a policy you pay for yourself. The idea is to replace your take home pay, not to leave you better off than working.
The best policies pay out if you cannot do your own job. Cheaper policies only pay if you cannot do any suitable job, which can make claims much harder. We always check the definition before recommending a policy.
Statutory sick pay is a small weekly amount and lasts up to 28 weeks. Check what your employer actually pays and for how long, because that sets your deferred period and the benefit you need.
Self employed people have no sick pay at all, so income protection is often the most important cover they can have. Insurers usually base the benefit on your share of profits or salary and dividends.
Your age, job, health, smoking status, the deferred period and the type of cover all affect the premium. A manual job usually costs more to cover than office work, and guaranteed premiums cost more at the start but cannot rise later.
Income protection and your mortgage
If you were off work for six months, could you still pay the mortgage? For most people the honest answer is no. Income protection cover keeps your mortgage payments and household bills going while you recover, and it works well alongside life insurance and critical illness cover .
You do not pay us a fee for protection advice. If you decide to take out a policy, the insurer pays us commission. We compare policies from across the whole of the market and explain what each one does and does not cover before you decide.
