Best income protection insurance UK

Finding the best income protection insurance to meet your needs can seem like a daunting task, but it doesn’t have to be.

A number of personal factors, such as your budget, what you’d like to cover, your occupation and what other sources of finance you have available (such as savings and sick pay etc) will help to determine what income protection is best for you.

By using the services of Reassured Advice, our team of experts can compare policies from the UK’s best providers on your behalf. Our quote service is fee-free and tailored to your needs.

In this article we’ll being covering:

  • Who offers the best income protection
  • Which is the best type of income protection
  • Whether income protection is really worth it
  • Top tips on securing the best income protection policy

Keep reading to find out the best income protection insurance to meet your unique needs…

Is income protection worth it?

As we’re more likely to fall ill than pass away during our working life, income protection insurance can be beneficial to anyone who works.

This is to help you protect essential costs and prevent you from falling on hard times.

If you’re employed by a business that offers full sick pay and/or have a large sum of personal finance to fall back on, this may be sufficient enough to help keep you afloat while you’re off work, or you may require a lesser amount of cover.

However, if you have no other financial safety net to fall back on, income protection insurance can act as essential financial support.

In particular, income protection may be more beneficial for those who:

  • Are self-employed - Self-employed workers don’t benefit from full sick pay from an employer. Therefore, income protection payments can help you to minimise financial strain while you’re unable to work due to sickness or accident
  • Don’t have their own personal savings - If you were suddenly left unable to work, could you cope financially with the amount of savings you currently have? With one in seven people having no savings at all to fall back on[1], income protection payments could be a crucial safety net
  • Don’t receive full sick pay - Not everyone has access to the same employee benefits package and some may be more fortunate with their sick pay allowance than others. For those who don’t benefit from full sick pay, income protection can help to keep you afloat financially
  • Have a family to provide for - Those with a family will want to ensure that their loved ones are taken care of no matter what. Income protection can help you to provide for your family while you may not be able to earn your usual income

If you’re unsure of whether income protection insurance will be worth it for you, you can always speak to an expert such as Reassured Advice.

A friendly member of the team will be able to talk through your needs and provide you with all the information you need about all of your available options.

Who has the best income protection insurance?

Our research has found that the following nine providers offer the best income protection plans in the UK:

  1. AIG
  2. Aviva
  3. British Friendly Society
  4. Legal & General
  5. LV=
  6. Nationwide
  7. Royal London
  8. The Exeter
  9. Vitality[2]

All of the above income protection providers are highly-rated on Defaqto, scoring a rating of 4 or 5 stars.

Reassured Advice offer a whole of market comparison service, meaning we can compare and provide cover from all of the above providers, plus smaller specialists.

A friendly member of the time will be happy to provide you with all the information you need.

Which income protection is best?

The best income protection will be the policy that:

Pays out to you to help replace lost income as a result of being too ill or injured to work.

Can pay out up to 70% of your usual income so you don’t fall on hard times financially while you’re off work.

Allows you to keep up with mortgage or rental costs, as well as household bills and utilities.

Helps you to cover essential costs such as food shop, transport, debts, loans etc.

Has a monthly premium that fits comfortably within your budget.

Provides peace of mind that you won’t fall on hard times if you are unable to work due to sickness or accident.

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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Let us find your best quotes.

How to get the best income protection insurance?

One of the main benefits of income protection is that you have the flexibility to choose many of the terms of your policy.

For example:

  • Length of policy
  • Definition of incapacity
  • Length of waiting period
  • Premium payment type

Therefore, to get the best income protection insurance that meets your needs you’ll need to choose the most favourable terms.

Length of policy

Typically, when taking out income protection insurance, you’ll need to choose whether you want to be covered on a short or long term basis.

Short-term income protection may be better suited to those on a strict budget who want some form of protection in place, as premiums tend to be cheaper due to the shorter pay out period (typically a maximum of up to two years).

Whereas long-term cover may be better suited to those who’re self-employed as you can choose to be covered up until retirement age, thus providing cover for your whole working life.

Why not use Reassured Advice for a short vs long term income protection comparison?


Definition of incapacity

You’ll then need to choose a definition of incapacity. This will define what you can and can’t make a claim for. Your options include:

  • Own occupation - You’ll be able to make a claim if you’re unable to perform your own occupation. You won’t be asked to do any other job
  • Suited tasks (or suited occupation) - You may be asked to carry out another job that suits your skills and experience if you are unable to do your own. To make a claim you must be unable to do both your own occupation or any other suited occupations
  • Any occupation - You’ll only be able to make a claim if you’re unable to work in any occupation. This means you may be asked to work in a different job role

An ‘own occupation’ definition can often be considered the best as, for most, it’s the most straightforward definition for making a claim.

However, there are some instances where an own occupation definition may not be suitable.

For example, those with high-risk occupations may struggle to secure a policy with this definition due to the risk involved with their job. Therefore, the best definition for them may be a suited tasks or any occupation policy.

Reassured Advice can secure you a policy with an own occupation, suited tasks or any occupation definition of incapacity - whatever most meets your needs.


Length of deferred period

The deferred period (or waiting period) refers to the period of time in between your first sick day and when you’d like your payments to begin.

You’ll have the ability to choose the length of your deferred period at the point of application.

How long you wish your deferred period to be will depend on your personal circumstances.

For example, if you receive sick pay from an employer, you may want your income protection payments to start when your sick pay comes to an end. Whereas, if you don’t receive sick pay you’ll likely want your payments to start sooner.

What type of policy you have may also influence how long your deferred period is, as some short term policies may allow a deferred period as short as one day. Whereas some long term policies have a minimum deferred period of four weeks.


Premium payment type

You’ll also have the ability to choose how you’d like to pay for your premiums. The most common premium payment options include:

  • Guaranteed - These are premiums that remain the same throughout the lifetime of your policy
  • Reviewable - These are premiums that are subject to change over time at the discretion of the provider
  • Age-banded - These are premiums that increase each year as you age

Guaranteed premiums can often be classed as the ‘best option’, as you’ll never have to pay any more for your monthly premium than originally stated.

However, if you’re a smoker, reviewable or age-banded premiums may be more favourable as your smoking habit may not always be factored into the price you pay.

Comparing policies from multiple providers can help you to find the most favourable terms.

Why not let Reassured Advice do the hard work for you and conduct this comparison on your behalf?

What’s the best income protection insurance for self-employed?

The best income protection insurance for someone who’s self-employed will be a policy that covers you for the longest possible time and will pay out the maximum percentage of your income.

This is because self-employed workers won’t benefit from sick pay from an employer and, therefore, will need the most comprehensive cover.

For this reason, a long term policy may be the most suitable option as you have the potential to be covered up until you reach retirement.

In terms of the definition of incapacity, the industry and level of risk involved in your job may influence which definition will be well suited.

For example, those with occupations that are considered to be low risk, an ‘own occupation’ definition may be best suited as you’ll be able to claim if you’re unable to complete the day to day activities of your role.

In contrast, those with more high-risk occupations, such as those in the construction industry, may not be able to secure an own occupation definition due to the level of risk involved with their job.

This means a ‘suited tasks’ or ‘any occupation’ may be more suitable. In these instances, the type of injuries sustained (due to the level of risk) may better meet these definitions of incapacity.

What’s the best value income protection insurance?

Securing cheap income protection insurance is often the top priority when taking out cover.

While it’s important to ensure you’re not paying over the odds for your policy, simply choosing the cheapest option may not always be the best solution to meet your needs.

The best value for money income protection will be the policy that meets your needs and is within your budget.

Providers will take certain key information into consideration when calculating the cost of your monthly premium. This includes:

  • Your age
  • Your occupation
  • Smoking status
  • Your health and wellbeing
  • Lifestyle (any high-risk hobbies)

This information along with the terms of your policy will allow providers to calculate your monthly premium.

Reassured Advice offer affordable monthly premiums of £10 and £5.


The table below shows the potential monthly pay out amount for a monthly premium of £10:

AgeCovered untilMonthly premiumMonthly benefit amount
3065£10£2,110
3565£10£1,867
4065£10£1,750
4565£10£1,209
5065£10£858


The table below shows the potential monthly pay out amount for a monthly premium of £5:

AgeCovered untilMonthly premiumMonthly benefit amount
3065£5£1,530
3565£5£1,182
4065£5£875
4565£5£604
5065£5£396

The examples above are based on a benefit amount to age 65, with a three month deferred period, based on one year guaranteed premiums. Please note, the benefit amount and/or premium is subject to medical underwriting and will vary depending on your own personal circumstances and your chosen policy terms

Which income protection provider has the best pay out rate?

Pay out rates are often a factor that can sway a decision as to choose a certain provider or not.

Pay out rates help to give a good indication of how likely it is for a provider to pay out when a claim is made.

In an ideal world, all pay out rates would be 100% but in some instances a claim may not meet the definition listed within the policy or there may be a non-disclosure involved.

Non-disclosure refers to not being completely truthful during the application process. If it’s later found that you lied or withheld information this can lead to a pay out being denied.


The table below shows nine popular income protection providers and their most recent pay out rates:

PositionName of providerPay out rate
1 V Life logo 96.4%
2 LV= logo 95%
3 Royal London logo 93.1%
4 Legal & General logo 93%
5 The Exeter logo 91%
6 Aegon logo 91%
7 Aviva logo 87.5%
8 British Friendly logo 87%
9 Zurich logo 85%

The information displayed above has been taken from each providers website and is correct as of 13/08/2021

How much of your income does income protection cover?

Income protection insurance pays out a percentage of your usual income. Most commonly, the percentage paid out is between 50% and 70%.

Therefore, the amount paid out to you will depend on:

  • How much income you earn
  • What percentage your chosen provider pays out at

The percentage paid out varies between providers. For example, an income protection policy from LV= can pay out up to 60% of your income. Whereas, Royal London can pay out up to 65%.

This highlights the need to compare quotes to find the provider who will offer you the highest level of cover.

Reassured Advice can secure cover for you from providers who offer to pay out 70% of your usual income.

Simply get in touch with a friendly member of the team for your free quotes.

Compare income protection quotes

To secure the best income protection insurance, it’s important to compare offerings from multiple providers.

Reassured Advice can compare policies from ALL of the UK’s leading providers, as well as smaller specialist providers to help you find the best option to meet your needs.

Our quotes are personalised, no obligation and fee free. The best part is that income protection through Reassured Advice starts from just 50p-a-day.

Why not get in touch with a friendly member of the team today to protect what’s important to you.

Sources:

[1] https://www.independent.co.uk/money/one-in-five-adults-have-less-than-ps100-in-savings-to-fall-back-on-b1865413.html

[2] https://boughtbymany.com/news/article/best-income-protection-insurance/

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