The guidance on this site is based on our own analysis and is meant to help you identify options and narrow down your choices. We do not advise or tell you which product to buy; undertake your own due diligence before entering into any agreement. Read our full disclosure here.

What is Income Protection Insurance?

We all suffer from sickness or injury from time to time, and sometimes this means having to take time off work. This may result in lost income, and many may struggle to keep up with day-to-day payments such as mortgages and bills. Thankfully, Income Protection Insurance is designed specifically to help you in times like these.

Simply put, income protection is a type of long-term insurance policy which pays you a regular income if you are unable to work as a result of sickness, injury or disability. These payments will stop once you have returned to work or have chosen to retire. Income protection is sometimes called permanent health insurance, so keep an eye out for this too!

Let's take a closer look at how income protection insurance works.

picture of a person and piggy bank

How does Income Protection Insurance Work?

"Income Protection Insurance provides you with a regular income if you can't work because of sickness or disability"

The specific terms and conditions of your income protection policy may vary slightly depending on your provider but generally speaking, income protection policies work in the following ways:

  • Income protection covers you until your return to work, retirement, death, policy end date or until the limited claim period on your policy ends — whichever occurs sooner
  • There is no limit to how many times you can claim, but note this only applies for the period of time your policy lasts
  • The typical pay out is between 50-70% of your income whilst you are unable to work, and these payments are tax-free

There is a deferred period, essentially a pre-agreed waiting period, before the payments start. You'll find the most common are 4, 13, 26 weeks and a year. This is because in some cases you may not need the money right away, for example if your employer provides sick pay or if you're able to claim statutory sick pay after you stop work.

Note that income protection period is not the same as critical illness cover — critical illness cover provides financial support if you are diagnosed with any medical condition included in the policy, and your insurer will pay out a tax-free lump sum which can help cover the costs of treatment as well as other things, like rent or mortgage payments.

Do you really need Income Protection Insurance?

There is no right or wrong answer to this question but it's important to think carefully about your own individual circumstances. Here are some things to think about:

Income Protection Insurance may be a good option for you if:

  • You don't already get income protection insurance through your employer (some offer this as a benefit, so do double check!)
  • Your employer only offers sick pay for a short period of time, making it difficult to support yourself in the long-term
  • You are self-employed so do not receive any kind of sick pay through your employer
  • You wouldn't be able to afford to continue, or wouldn't be supported to continue making regular, everyday payments in the event you are unable to work

Income Protection Insurance may not be needed if:

  • Your employer offers sick pay for 12 months or longer, meaning you can still financially support yourself
  • You are eligible to receive government benefits which provide adequate financial support — you can find out more about these benefits here
  • You have sufficient savings to fall back on when you are off work — it's important to be realistic here as you might be off work for some time, so it's important to consider whether your savings will be enough to support you in the long-term
  • You have a partner or family member(s) that can support you — again, think carefully about this as you may require long term financial support

How much is Income Protection Insurance?

The cost of income protection insurance will vary depending on the policy itself, your insurer and your own individual circumstances. Also, the types of illnesses and conditions that are covered will vary from insurer to insurer and this can impact on the cost significantly.

As a guide, we've compiled and averaged the quotes we received for a 40 year old, with an income of £38,000. We chose a benefit amount of £1,000 per month with a maximum waiting period of 90 days and a benefit period of up to age 65 for Accident and Sickness cover. Note for accident, sickness and unemployment cover the default benefit period was 12 months only. You can find the average of these quotes in the table below, but remember any quotes you receive may be higher or lower depending on your circumstances.

Income protection insurance average quote comparison

£ per month

Accident and sickness cover only


Accident, sickness and unemployment cover


We've thrown around a few terms here, so we've broken them down for you below.

  • Benefit amount: how much of your monthly income you'd like to cover. The maximum insurers will cover is typically between 50-70% of your gross monthly income
  • Waiting period: this is the period of time that must pass before your payments start. Some insurers may also have a 'minimum claim period' (often 30 days) which is in addition to your waiting period, so be sure to read your policy documentation carefully so you know exactly how much time you will have to wait before your first payment. The most common waiting period you can choose from are 30 days, 60 days, 90 days, 180 days and 365 days. It's important that you consider how long you can realistically manage with no income coming in to determine the right length of time for you
  • Benefit period: this is the amount of time that your policy will pay out if you need to make a claim due to being unable to work. If you choose 24 months or longer, the insurer may require you to complete a medical questionnaire during your application
  • Accident and sickness only: covers accidents and short and/or long-term illnesses. Note this excludes pre-existing conditions and most back and stress related condition
  • Accident, sickness and unemployment: covers accidents, short and/or long-term illnesses, redundancy and involuntary unemployment, Note this excludes pre-existing conditions, most back and stress related conditions, misconduct and voluntary redundancy

There are also some general factors that can impact the cost of income protection insurance. Anything that is likely to increase the likelihood of sickness or injury thereby increasing your likelihood of being off work is probably going to increase the cost of your premiums. Here are some of the most common factors that are good to be aware of:

  • Your age
  • Your job
  • Your lifestyle (i.e. if you engage in certain behaviours like smoking)
  • The percentage of your income that your policy will cover
  • Your deferred period — the longer this is, the cheaper your premiums are likely to be
  • Your medical history
  • Your policy duration
  • The type of premium you pay — this can be a standard premium which the insurer can increase over time, or a guaranteed premium which remains fixed until your policy ends

How do I purchase Income Protection Insurance?

Compare income protection policies online or seek advice from a financial advisor or specialist insurance broker if you're unsure

There are a lot of different things to consider if you're thinking about income protection insurance, so we'd recommend doing your research beforehand to compare policies and providers.

One of the easiest ways to do this is by using an online comparison site, which makes it quick and simple to compare lots of different policy benefits and their prices.

If you're new to income protection insurance or are a bit unsure then we'd recommend seeking advice from an independent financial advisor or specialist insurance broker. They are the experts so will be able to explain your options and answer any questions you may have. It is their job to find the right policy for you, so you'll be in safe hands. You can search for an insurance broker by using the British Insurance Brokers’ Association (BIBA) Find a Broker service. Brokers usually earn money through commission paid by the insurer though in some cases you may be charged a fee for their services.


No, these are fundamentally different.

  • Income protection insurance: is a regular payment constituting a percentage of your salary in the event you cannot work through illness or injury, until you are able to return to work
  • Critical illness cover: provides financial support if you are diagnosed with any medical condition included in the policy. Your insurer will pay out a tax-free lump sum (i.e. a one-off payment) which can help cover the costs of treatment as well as other things, like rent or mortgage payments

Be sure to check out our article on critical illness cover here if this seems like something that may work for you.

This depends on the type of cover you opt for. If you have chosen accident, sickness and unemployment cover you may be eligible if you lose your job through no fault of your own. However, if you lose your job as a result of something you have done your insurer is unlikely to pay out. Note you cannot take out a policy simply because you are unemployed!

Most insurers will cover you if you are self-employed. In fact, income protection is something we'd certainly recommend having a think about if this applies to you. This is because those who are self-employed do not receive sick pay, so opting for income protection insurance can give you extra peace of mind in the event you are unable to work.

Statutory Sick Pay (SSP) is a weekly payment paid by your employer if you're too sick to work. You can receive these payment for up to 28 weeks, with the current rate being £99.35 per week. It is not the same as income protection, which can give you more financial security given the fact it can cover up to 60% of your income. You can find out more about SSP here.

Typically Income Protection will cover between 50-70% of your gross monthly income, though of course this will depends on your circumstances and your individual plan.

Typically you'll be allowed to continue the same policy though in any case you should let your insurer know of your change in circumstances. You may find changing job might affect your premiums, and these may increase or decrease depending on the profession. For example, if you enter a more high-risk job where risk of injury is greater, you may find your premiums increase.

No, these payments are tax-free.