How Much Income Protection Do I Need?
Updated January 2026 · FCA Registered (989177)
Most people need income protection covering 50–70% of their gross monthly salary. That is the maximum most UK insurers allow. Because benefits are paid tax-free on personally owned policies, 60% of your gross income typically replaces around 80–90% of your take-home pay — usually enough to cover your mortgage, bills, and essential spending.
Worked Examples by Salary Level
| Annual Salary | Monthly Gross | 60% Cover (monthly) | Approx. Take-Home (net) |
|---|---|---|---|
| £20,000 | £1,667 | £1,000/month | ~£1,380 net |
| £30,000 | £2,500 | £1,500/month | ~£1,980 net |
| £36,000 | £3,000 | £1,800/month | ~£2,300 net |
| £50,000 | £4,167 | £2,500/month | ~£3,070 net |
| £60,000 | £5,000 | £3,000/month | ~£3,520 net |
| £80,000 | £6,667 | £4,000/month | ~£4,490 net |
Benefits from personally owned income protection policies are typically paid tax-free. Net take-home figures are approximate and based on 2025/26 tax rates for England and Wales.
How to Calculate the Right Amount for You
Rather than simply taking the maximum 60–70%, work out your actual minimum monthly needs. Add up your essential outgoings:
| Outgoing | Example amount |
|---|---|
| Mortgage or rent | £1,100/month |
| Council tax + utilities | £250/month |
| Food shopping | £350/month |
| Transport | £150/month |
| Insurance premiums | £100/month |
| Minimum debt repayments | £100/month |
| Minimum needed | £2,050/month |
In this example, you need at least £2,050/month. If you earn £36,000 (£3,000/month gross), 60% cover gives you £1,800/month tax-free — close to your minimum. You might choose to round up to £2,000/month to ensure you are fully covered.
Factors That Change the Amount You Need
| Factor | Effect on cover needed |
|---|---|
| Employer sick pay (e.g. 6 months full pay) | Can choose longer deferred period — lower premium |
| Self-employed with no sick pay | Short deferred period needed — higher premium |
| Partner's income covers most outgoings | Lower benefit needed — consider 40–50% of salary |
| High mortgage relative to income | Aim for 60–70% to ensure mortgage is covered |
| State benefits available | ESA and UC can supplement — may reduce gap to fill |
| Savings of 3–6 months' expenses | Longer deferred period viable — meaningfully cheaper |
The Deferred Period: How It Affects Cost
The deferred period is the waiting time between you stopping work and your first benefit payment. It is one of the biggest levers for controlling premium cost.
| Deferred Period | Best for | Premium impact |
|---|---|---|
| 4 weeks | Self-employed with no savings buffer | Highest premium |
| 8 weeks | Self-employed with small emergency fund | High premium |
| 13 weeks | Employed with limited sick pay | Medium premium |
| 26 weeks | Employed with 3–6 months sick pay, or savings | Significantly lower |
| 52 weeks | Employed with very generous sick pay | Lowest premium |
Want to know the exact amount for your situation?
The right benefit amount depends on your actual outgoings, your employer's sick pay, any savings buffer, and your occupation — which affects both eligibility and premium. An adviser can run through the numbers with you and find the most cost-effective policy.
Common Questions
How much income protection do I need if I'm self-employed?
Self-employed people have no employer sick pay, so income protection is particularly important. You should aim to cover 60–70% of your average monthly earnings. Use your last 2–3 years of self-assessment tax returns to evidence income. A 4 or 8-week deferred period is typical, as there is no other safety net during the first weeks of illness.
Does income protection affect Universal Credit or benefits?
Income protection payouts are counted as income for Universal Credit purposes and may reduce your UC entitlement. However, because UC provides only modest support, having your own income protection policy means your total income from both sources is typically significantly higher than relying on benefits alone. Most advisers recommend income protection over relying on state support.
How long should income protection last?
Most people choose a policy that pays until retirement age (typically 65 or 68). This means if you suffer a permanent condition in your 40s, you receive monthly payments for 25+ years. Short-term income protection policies (2 or 5 years maximum payout) are cheaper but leave a gap if your illness lasts longer — a significant risk with serious conditions.
Frequently Asked Questions
How much income protection do I need?
Most people take out income protection covering 50–70% of their gross (pre-tax) monthly income. This is the maximum most insurers allow. For example, someone earning £36,000 per year (£3,000/month gross) would typically cover £1,500–£2,100/month. The right amount depends on your fixed monthly outgoings — mortgage, rent, bills, and essential spending.
Can income protection cover 100% of my salary?
No. Insurers cap income protection at 50–70% of your gross income, typically up to around £10,000–£12,000 per month. This is intentional — the insurer wants you to have financial incentive to return to work rather than remain on claim indefinitely. Benefits are usually paid tax-free, so 60% of your gross income often equates to roughly 80–90% of your take-home pay.
Does income protection count towards my salary?
Income protection benefits paid under a personally owned policy are generally tax-free. Benefits paid under an employer-paid group scheme are typically taxable. Because personally owned income protection pays tax-free, covering 60% of your gross salary usually replaces around 80–90% of your net take-home pay — often enough to maintain your lifestyle.
Should I include my bonus in income protection calculations?
Most income protection policies base benefits on your basic salary only, not bonuses or commission. Some executive income protection policies allow commission-based income to be included, but you will need to provide evidence of earnings. If your bonus forms a significant part of your income, discuss this with an adviser when choosing a policy.
How does the deferred period affect how much cover I need?
The deferred period is how long you wait before payments begin — typically 4, 8, 13, or 26 weeks. If your employer pays 3 months full sick pay followed by 3 months half pay, a 26-week deferred period makes sense and substantially reduces your premium. If you are self-employed with no sick pay safety net, a shorter deferred period of 4 or 8 weeks is usually more appropriate.
Related Guides
Calculate the Right Cover for Your Income
Our FCA-regulated advisers will help you work out exactly how much income protection you need and compare policies from the whole market.