Income Protection Explained
How income protection insurance safeguards your earnings if illness or injury stops you working.
Income protection pays up to 70% of your salary if illness or injury stops you working. This video explains deferred periods (typically 4-52 weeks), own occupation vs any occupation definitions, how premiums are calculated, and why this cover is essential for self-employed people. We compare income protection to sick pay and critical illness cover.
Your income is your biggest asset: Over a working lifetime, your earnings total hundreds of thousands of pounds. Income protection safeguards this asset if you cannot work due to illness or injury.
Works differently to sick pay: Statutory sick pay is just £116.75 per week for a maximum of 28 weeks. Employer sick pay varies but often reduces after a few months. Income protection can pay 50-70% of your salary until you recover, retire, or the policy ends.
Deferred periods: The waiting period before payments begin, typically 4-52 weeks. Longer deferred periods reduce premiums significantly. If you have 6 months of sick pay, choose a 26-week deferred period.
Benefit amounts: Insurers typically allow 50-70% of gross salary. The amount is capped to ensure you have incentive to return to work. Some policies allow you to insure regular bonuses or commission.
Claim lengths: Policies pay for as long as you cannot work—potentially until retirement age. Short-term income protection policies pay for 1-2 years and cost less but offer limited protection.
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