What is Income Protection?

  • Protect your income if unable to work due to accident or sickness
  • Short-term and long-term options available
  • Can pay out up to 70% of your gross salary
  • Affordable monthly premiums
  • Policies to suit every need
Income protection summary


Income protection is a type of insurance policy that can pay out a percentage of your gross salary to help replace lost income if you’re unable to work as a result of an accident or sickness.

There are various policy types to choose from and you can choose to take your cover out on a short-term or long-term basis.

Which option is best for you will depend on the unique needs of you and your loved ones.

The monthly income payments you receive can be used to help cover any costs your income would typically cover, helping to alleviate financial stress at an already stressful time.

Coronavirus Income Protection

The Coronavirus pandemic has left many people worrying about their income.

Unfortunately, some providers have ceased providing new income protection policies due to the pandemic.

While other providers are still offering cover, there may be some COVID-19 exclusions included in the policy and many policies won’t offer any unemployment cover at this time.

See our income protection insurance Coronavirus article for more information »

While this is a temporary situation, if you’ve fallen on hard times there are government schemes and benefits you can sign up for during these unprecedented times.

Alternatively, seeking the help of a broker (such as Reassured Advice) means you can compare the available offerings on the market to find the most suitable protection at a price within your budget.

Compare Income Protection Quotes »

Why do I need income protection?

Being unable to work can take a big toll on your finances, but income protection can offer financial support by paying out a percentage of your gross annual salary for a specified period of time.

Anyone who’s worried about what may happen to their finances if they were unable to work due to illness or injury may benefit from having income protection insurance in place.

In particular, you may need income protection if you;

Those who’re self-employed won’t benefit from receiving sick pay from an employer, so income protection insurance can be an essential safety net.

Similarly, those who don’t receive full sick pay from their employer or don’t have their own personal savings to fall back on may benefit from this additional financial support.

If you were left unable to work, could you continue to:

  • Make rent or mortgage payments?
  • Cover bills and utilities?
  • Afford other daily living costs?
  • Pay for childcare?
  • Pay back debts (such as credit cards or loans)?

Income protection can be vital in helping to cover these financial commitments to get you back on your feet should you become unable to work.

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How does income protection work?

Income protection insurance works by paying out a percentage of your income in the event you become unable to work due to an accident or sickness.

Typically between 50 - 70% of your usual gross income will be paid out, but this can vary between providers.

Rather than a lump sum, you’ll receive monthly (tax-free) installments which can help make ends meet while you’re unable to work.

Your payments will begin once your deferred period has passed and will continue until whichever of the following happens first:

  • Your payment period comes to an end
  • You return to work
  • You retire
  • Your policy comes to an end

The deferred, or waiting, period refers to the time in between your first sick day and the day you’d like your payments begin. The length of your deferred period will be chosen at the point of application.

What types of income protection are there?

There are three main types of income protection which are based on the level of incapacity* you’d like to be covered for. These include:

  • Own occupation - offers the most comprehensive cover as you’ll be able to make a claim if you’re unable to fulfil your specific job role and you won’t be asked to carry out a different job role.
  • Suited tasks - you’ll only be able to make a claim if you can’t carry out your job or another job that suits your skills and experience. This means if you can’t perform your usual job role, you may be asked to take on another that suits your skills instead.
  • Any occupation - you’ll only be able to make a claim if you can’t carry out any work at all. Often, this definition of incapacity requires total disability for a claim to be successful.

*Incapacity refers to the inability to do something, in regards to income protection this refers to the inability to work

Income protection policies can be taken out on a short-term or long-term basis.

Short-term income protection offers shorter term cover. Typically, your payment period can be from 1 – 2 years but this can vary between providers.

Long-term income protection offers a much longer payment period as it’s possible to be covered up until retirement, so you’re covered for your whole working life.

Both options will cover you in the event you’re unable to work due to illness or injury.

Some short-term policies offer the option to add unemployment cover, although not all providers will offer this.

Please note that due to the COVID-19 pandemic, most providers have ceased any unemployment cover for new applicants.

Speaking to an expert can help you to determine the right option for you, so why not get in touch with Reassured Advice?

We can provide full income protection solutions or budget friendly options.

What can income protection be used for?

Income protection is designed to protect your income should you become unable to work due to:

  • Accident
  • Sickness

The payments received from an income protection insurance policy can be used to cover whatever you see fit. Typically, this would be whatever your usual salary would cover.

Income protection payments can be used to cover a range of financial commitments, including:

  • Mortgage payments
  • Rent
  • Bills
  • Daily living costs
  • Childcare
  • Debts
  • Medical bills

We have written a dedicated what does income protection cover article if you require additional information »

How to claim income protection insurance

You can make a claim on an income protection policy after one of the following events occurs:

  • You become too ill to work
  • You become injured as a result of an accident which prevents you from working

To make a claim you’ll simply need to contact your provider, who’ll be able to talk you through your next steps.

You may be asked to fill in a claims form to send back to your insurer.

You may also need to provide evidence of your illness or injury from your doctor or medical professional.

Once your claim has been approved, you’ll need to wait for your deferred period to pass before your payments will commence.

Compare Income Protection Quotes »

When does income protection pay out?

An income protection policy usually won’t pay out straight away.

Instead, you’ll need to wait for your deferred period to pass. This is the period of time between your first sick day from work and the day you start to receive your payments.

There’s often a minimum time of four weeks after your first sick day, but this can vary between providers.

Once the deferred period has passed, your pay outs will commence and continue until your payment period comes to an end, you return to work, you retire or your policy expires – whichever happens first.

How long does income protection pay out for?

Once your deferred period has passed and your payments have commenced, you’ll continue to receive your payments until:

  • Your payment period comes to an end
  • You return to work
  • You retire
  • Your policy expires

With short-term income protection, the pay out period can be up to 1 – 2 years depending on the provider.

Long-term income protection allows you to have a much longer pay out period and can pay out to you all the way up until retirement.

If you have a retirement age in mind, you can choose to have your pay out period last until this age - giving you protection for your whole working life.

How much is income protection insurance?

The price you pay for your policy will vary depending on certain factors. At the point of application you’ll be asked about:

  • Your age
  • Any pre-existing medical conditions
  • Your smoking status
  • Your lifestyle (high-risk hobbies)
  • Your occupation (which class group)
  • Type of policy
  • Length of payment period
  • Length of deferred (or waiting) period

Occupations are typically split into ‘class groups’ based on risk. The risker the occupation, the higher the premium.

In general, occupations such as professional and administrative roles can be seen as low risk.

Whereas occupations within building and construction can be seen as more high risk.

Class groups vary significantly between providers, which highlights the importance of comparing multiple quotes as one insurer may deem you as less risky than another.

We have created a comprehensive income protection insurance calculator UK article too if you require more information on cost »

There are a range of premium payment options to choose from which will also influence how much you pay:

  • Reviewable - with reviewable premiums the insurer has the right to change the amount you pay each month. The changes can be based on various factors such as increasing in age or increased risk. This means you could end up paying more than you originally set out.
  • Age banded - with age banded premiums, your premium increases each year as you get older at a guaranteed rate. While this type of premium can end up being more expensive, you typically won’t experience loaded premiums if you’re a smoker or have a risky occupation.
  • Guaranteed – with guaranteed premiums the amount you pay each month remains the same throughout the lifetime of your policy, meaning you’ll never pay more than when you first took out the policy.

Comparing quotes is essential in securing the most cost-effective solution, why not let Reassured Advice save you time and money by comparing quotes on your behalf?

How much is income protection per month?

It’s possible to secure income protection from just £5 a month**.

However, no two quotes are the same as we all have different circumstances and budgets. The exact price that you pay will be determined using the factors mentioned above.

Get in touch with a friendly member of our team at Reassured Advice to get the best price on a policy that meets all of your needs.

How much income protection do I need?

How much income protection you need will ultimately depend on your personal circumstances.

You may want to consider the following factors when deciding on your cover amount:

  • How much you earn
  • Your current savings
  • What financial commitments you have
  • Whether you have any other sources of income
  • If you receive full sick pay
  • Whether you have any other financial protection in place

By assessing your current financial circumstances and what you’ll need to cover you can get a general idea of the level of cover required.

For example, someone who receives full sick pay from an employer is likely to require less cover than someone who is self-employed who doesn’t receive full sick pay.

Alternatively, you could discuss your needs with Reassured Advice. We can take your financial circumstances into consideration and provide you with the most appropriate policy.

How much income protection insurance do you need?

Enter your monthly financial commitments to understand the level of income protection cover you require.

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£723 a month is the average monthly mortgage payment in the UK, with the average monthly rental price coming in at £700.

The majority of our monthly income will go towards rental or mortgage payments.

For this reason, it’s essential to have precautions in place to ensure you could keep up to date with your payments if you weren’t receiving your usual income.

Monthly income protection payments can help to cover this large expense and ensure you can stay in your home.
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According to the Money Advice Service, the average household spends £340 a month on household bills.

This includes electricity, gas, TV and broadband.
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Childcare costs are on the rise with it now costing £137.69 per week for part-time nursery for a child under the age of two.

That’s over £550 per month - is this an amount you’d be able to keep up with if you were unable to work?

Becoming ill could also result in the need for additional childcare while you attend doctors’ appointments or medical treatment.
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The average household in the UK spends around £97 a week on their food shop, totaling £388 a month.

While this may seem like a small amount in comparison to some of the other expenses mentioned, the food shop is often where we try to scrimp and save when we fall on hard times.

Income protection can take care of the cost of your weekly food shop, as well as many other essential costs.
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At the beginning of 2020, credit card debt in the UK was at £2.1 billion, with almost 27 million UK residents in some kind of debt.

Becoming unable to work could make it hard to keep up with credit card or loan payments (including car finance or other financed goods).

Failure to keep up with payments could result in additional interest being incurred or late fees issues - resulting in a higher total needing to be paid.
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The average spent on public transport each month comes to an average of £94.

This includes the cost of public transport, as well as petrol and diesel vehicles.

While this amount may reduce while you’re unable to work as you won’t need to commute there may be additional spending on public transportation if your illness or injury leaves you unable to drive.
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Your total cover estimate

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Is income protection worth it?

Income protection can be very beneficial to those with a family, a mortgage or other financial commitments.

If you were unable to work for an extended period of time, would you be able to get by on your savings alone?

An income protection policy can be essential in keeping you afloat while you’re unable to work, without the need to dip into your personal savings.

Those who’re self-employed may find this type of financial protection particularly beneficial to provide financial support as they won’t receive sick pay from an employer.

If you’re unsure whether income protection is the right option for you, contact Reassured Advice. We can provide you with all the information you need to secure the right financial protection.

Life insurance or income protection?

Both life insurance and income protection provide financial support, but they provide it in different ways.

Family life insurance will pay out a lump sum to your loved ones if you pass away during the term of your policy.

Whereas income protection will pay out monthly income payments if you’re unable to work due to an accident or sickness.

Depending on your budget, it’s possible to take out a life insurance policy and income protection policy simultaneously.

Life insurance can help to secure the financial future of your loved ones if you were to pass away and income protection can help to offer financial support if you were to become unable to work.

Income Protection Life Insurance
Offers financial protection Offers financial protection
Affordable monthly premiums from 50p-a-day Affordable monthly premiums from 20p-a-day
Provides monthly (tax-free) income payments Provides a lump sum pay out
You can use the payments to cover financial commitments your usual salary would cover Pay out can be used by your loved ones after your passing to cover financial commitments


Why not use the Reassured Advice free quote service to compare both income protection and life insurance?

Income protection or critical illness cover?

Both income protection and critical illness cover can help to cover lost income as a result of being too ill to work.

However, there are some key differences with these policy types.

With critical illness cover, you can receive a lump sum pay out if you’re diagnosed with a specific life-changing illness that’s listed within your policy.

Whereas income protection allows you to make a claim for any illness that’s serious enough to prevent you from working and will pay out to you in monthly instalments.

If it’s within your budget, it’s possible to take out an income protection policy alongside a life insurance with critical illness policy.

We have written a comprehensive article on income protection or critical illness cover you may like to read for more detail »

Income Protection Critical illness cover
Can help to replace lost income if you’re too ill to work Can help to replace lost income if you’re diagnosed with a serious illness and cannot work
Claim does not have to be for a specific illness Illness must be listed within the policy and must meet the insurers definitions
Pay out will be made in monthly instalments Pay out is made as a lump sum
Can be taken out alongside a life insurance policy Can be added to a life insurance policy for an additional fee


To compare both income protection quotes and critical illness cover, simply get in touch with a friendly member of the Reassured Advice team.

What’s the difference between income protection and mortgage protection?

The main difference is that mortgage payment protection is designed to help cover your mortgage payments.

Income protection isn’t tied to a specific financial commitment, so you’re free to use the payments however you see fit.

This can include helping to cover your mortgage payments but it can also be used to cover other essential costs such as keeping up with bills or covering your day-to-day living costs.

Mortgage payment protection is not something we offer at Reassured, but Reassured Advice can compare income protection insurance quotes from all of the UK’s leading providers.

How long is the cancellation period for an income protection policy?

Typically, most income protection policies will come with a 30 day cancellation period.

This means you usually have 30 days to cancel and receive a full refund.

If you cancel after 30 days, the amount refunded may be less than what you’ve paid in or you may not be refunded at all.

The cancellation period may vary between providers so it’s always best to check the policy terms and conditions.

Is income protection taxable?

No, income protection payments are tax-free.

This is why most providers offer to pay out 50 - 70% of your gross salary, as this amount roughly works out as your net income.

Compare income protection insurance quotes (to secure the best deal)

Prices for income protection insurance can vary significantly between providers.

To ensure you’re getting the best deal on a policy that meets all of your needs, it’s essential to compare quotes.

Why not let Reassured Advice do this for you on your behalf?

Reassured Advice can compare quotes from the whole of the market and inform you of the most suitable option.

Reassured Advice can also be on hand to answer any questions you may have.

Quotes are fee-free and prices start from just 50p-a-day, why not get in touch?

Compare Income Protection with Reassured »

Sources:

**£5 per month income protection quotes are subject to individual status, occupation and medical underwriting. This quote is based on a £1,530 benefit amount to age 65 with a 3 month deferment period based on 1 year reviewable and age banded premiums for a 30-year-old. Quotes correct as of 18/02/21

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