Income Protection Insurance

Income protection insurance is designed to provide a regular monthly income if you are unable to work due to illness or injury.

Most policies will pay a percentage of your gross income typically up to around 50% to 70%, depending on the insurer and your employment status helping you continue to meet essential financial commitments while you recover.

Unlike critical illness cover, which pays a one-off lump sum for specific serious conditions, income protection provides ongoing monthly payments for as long as you remain unable to work, subject to the policy terms and selected benefit period.

Income protection can cover a wide range of medical conditions, including physical illnesses, injuries, stress, anxiety, depression, and musculoskeletal problems such as back pain provided the condition prevents you from carrying out your normal occupation as defined by the policy.

Policies are subject to underwriting, exclusions, insurer definitions, and terms and conditions.

Although both products are designed to provide financial support during ill health, they work in very different ways.

Critical illness cover pays a one-off lump sum if you are diagnosed with a specified serious condition listed within the policy, such as cancer, heart attack, or stroke.

Income protection, by contrast, pays a regular monthly income if you are unable to work due to illness or injury — regardless of whether the condition appears on a predefined list. This means income protection generally covers a much broader range of health issues.

In simple terms:

• Critical illness cover is designed to help with major financial impacts following a serious diagnosis.
• Income protection is designed to replace lost earnings while you are unable to work.

Many advisers consider income protection one of the most comprehensive forms of personal protection because of the wider range of conditions it can cover. However, the two types of cover can complement each other well as part of a broader financial protection plan.

Most income protection policies include a deferment period — sometimes called a waiting period — before payments begin.

Common deferment periods are: 4 weeks, 8 weeks, 13 weeks, 26 weeks and 52 weeks.

The deferment period you choose can significantly affect the cost of the policy. Generally, the longer the waiting period, the lower the monthly premium, because the insurer is less likely to pay for shorter-term absences from work.

If you receive sick pay through your employer, it often makes sense to align your deferment period with the length of your employer’s sick pay entitlement so that your income protection starts when your sick pay ends.

A broker can help you structure the policy so it works alongside any workplace benefits, savings, or existing protection arrangements.

For many self-employed people, income protection can be one of the most important and valuable forms of financial protection available.

Unlike employed workers, self-employed individuals often do not have access to employer sick pay, meaning an illness or injury could result in an immediate loss of income. Income protection helps provide financial continuity by replacing part of your earnings while you are unable to work.

This can help cover mortgage or rent payments, household bills, everyday living expenses and existing financial commitments.

Without protection in place, many self-employed people may need to rely on savings, reduce their lifestyle, or take on debt during periods away from work.

The level of cover available will depend on your income structure, occupation, and insurer criteria. Policies are subject to underwriting and terms and conditions.