Income protection insurance provides a financial safety net if you can’t work due to serious illness or injury. But is it right for you? Could your savings or workplace sick pay cover your bills if the unexpected happens?
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What Happens Without It?
Without income protection, you’d rely on savings or employer sick pay to get by. That might need to stretch until you recover—or longer. According to the Association of British Insurers (ABI), around one million UK workers annually face serious illness or injury that stops them working. Could you manage if you were one of them?
How Income Protection Works
This insurance replaces part of your income if you’re sidelined by health issues, offering peace of mind and steady support. Coverage varies:
- Duration: Short-term plans pay out for 2–5 years, while long-term options can last until you return to work or retire.
- Payouts: Basic plans offer £1,000–£1,500 monthly; traditional policies can reach up to £300,000 total, depending on your income and terms.
- Flexibility: Many policies let you claim multiple times, as long as the policy remains active.
Some “any occupation” policies stop payments if you’re deemed fit for any job—not just your own—so check the fine print.
Who Can Get It—and Who Can’t?
While available to most, income protection isn’t guaranteed. Insurers often reject high-risk jobs like divers, miners, armed forces members, or fishermen. If you’re in such a role, already unwell, or have a pre-existing condition, coverage might cost more—or be unavailable. You’ll need to shop around for a willing provider.
Factors to Consider
Deciding if you need this insurance depends on your situation. Ask yourself:
- Would my savings or sick pay hold me over?
- How long could I go without my full income?
- Does my job or health increase my risk of needing it?
What Affects the Cost?
Premiums hinge on several factors:
- Age and Sex: Older applicants or certain genders may pay more.
- Health: Smokers, drinkers, or those with medical histories face higher rates.
- Job and Hobbies: Dangerous work or risky pastimes (e.g., skydiving) bump up costs.
- Waiting Period: Opting for a longer delay before payouts (e.g., 3 months vs. 1) lowers premiums.
Pre-existing conditions can complicate things—some insurers exclude them, so disclose everything upfront to find the right fit.
Is It Worth It?
Income protection isn’t for everyone. If you’ve got robust savings, generous sick pay, or a low-risk lifestyle, you might skip it. But if a sudden health setback could derail your finances, it’s worth weighing the cost against the security. Compare policies carefully—duration, payout limits, and exclusions matter. Your peace of mind might just depend on it.