Long-term income protection insurance

Income protection is a type of insurance that will pay out to you in the event that you cannot work due to illness or injury.

Typically, policies are taken out on a short-term or long-term basis.

This article will be focusing on long-term income protection, covering areas such as how it differs from short-term income protection and what it will cover you for.

Keep reading to find out everything you need to know about long-term income protection…

Long-term income protection key points:

  • Can help to replace a percentage of your income if you become unable to work due to accident or sickness
  • Will pay out monthly, tax-free payments
  • You’ll pay a monthly premium for your cover
  • Policies can pay out 50% - 70% of your normal salary (before tax). The amount paid out can vary depending on the provider
  • Payments will begin after the waiting or deferred period has passed (this is the time in between your first sick day and the day you start to receive your payments)
  • Typically you can choose from two policy options; own occupation or suited tasks
  • Payments can help to cover expenses such as mortgage payments, rent, bills and family living costs
  • You’ll continue to receive payments until you return to work, until you retire until your payment period comes to an end or until your policy expires - whichever happens first
  • Provides longer term cover than short-term income protection

What is long-term income protection?

Long-term income protection is a form of financial protection that can replace a percentage of your income should you become unable to work due to accident or sickness.

The percentage paid out will vary depending on your provider but most commonly it’s between 50% - 70%.

Long-term income protection is designed to pay out to you for a longer period of time than short-term income protection, (which will typically pay out for up to 1 - 2 years).

With long-term income protection, you have the option to be covered up until retirement (if you specify this in your policy).

This means that if you’re diagnosed with a long-term illness (such as cancer) or you’re left with a disability after an accident (that may prevent you from working), you may be able to receive pay outs for the remainder of your working life.

Some policies may allow you to make more than one claim.

How much long-term income protection do you need?

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

?

£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.

£
?

According to the Money Advice Service, the average household spends £340 a month on household bills.

This includes electricity, gas, TV and broadband.

£
?

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.

£
?

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.

£
?

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.

£
?

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.

£
£

Your total cover estimate

£ 0

Let us find your best quotes.

What does long-term income protection cover?

List icon Cross
Illness Pre-existing illnesses
Injury due to accident Self-inflicted injury
  Illness or injury as a result of alcohol or drug abuse
  Unemployment


Long-term income protection is designed to cover you for accident and sickness.

This means that if you become too ill or injured (as a result of an accident) to work, you can make a claim on your policy and start to receive pay outs.

Exactly what you’re covered for may vary between providers, so when taking out a policy it’s important to read the policy terms and conditions so you know what you can make a claim for.

Income protection payments aren’t tied to a specific financial commitment, allowing you to use them how you see fit.

Income protection payments will typically be used to cover things that your usual income would cover. For example:

  • Mortgage payments
  • Rental payments
  • Family living costs
  • Childcare costs
  • Bills and utilities
  • Debts (such as credit cards or loans)
  • Other daily living costs

Depending on your circumstances, you could also use the payments to help fund any necessary medical treatment you may need for your illness or injury.

What doesn’t long-term income protection cover?

There may be a few exclusions written into an income protection policy which may prevent you from making a claim for that particular reason.

This can vary depending on the provider but can include:

  • Pre-existing conditions
  • Injuries or illness as a result of drug or alcohol misuse
  • Self-inflected injuries
  • Unemployment

You’ll need to disclose any pre-existing conditions you may have at the point of application.

This means that if you become ill and can’t work due to this illness, you won’t be able to make a claim.

Failure to disclose any conditions is known as non-disclosure and it can prevent a pay out being made.

If you develop an illness or become injured as a result of drug or alcohol misuse, most policies won’t allow you to make a claim as you typically can’t claim for any self-inflicted injuries.

It’s also important to be aware that, although short-term income protection can pay out for unemployment, a long-term income protection policy won’t pay out for this reason.

However, if you’re worried about protection against unemployment (and it’s within your budget) it’s possible to take out both types of income protection.

You could take out an unemployment only short-term policy and a long-term policy to protect you against illness and injury.

(At the time of writing this, most providers are currently not offering unemployment cover due to the Coronavirus pandemic).

Alternatively, you could take out a critical illness cover policy to protect your income if you’re unable to work due to illness caused by a critical condition (such as a stroke or some forms of cancer), alongside an unemployment only short-term income protection policy.

The list of illnesses you can claim for under a critical illness policy will differ from those included in an income protection policy so it’s best to check the policy terms and conditions.

Why not get in touch and let our team compare critical illness cover quotes on your behalf?

How does long-term income protection work?

Long-term income protection works by paying out a percentage of your income to you if you’re unable to work due to accident or sickness.

Typically, your policy will be a minimum of 5 years and can last until you reach retirement age - allowing you to be protected for the whole of your working life.

This is especially beneficial for those who’re self-employed and won’t benefit from sick pay.

Payments won’t start immediately after you have made a claim, instead, you’ll need to wait for your waiting/deferred period to pass.

The deferred period will be chosen at the point of application and is the time in between your first sick day and when you’d like your payments to start.

When you’d like to start receiving your payments will depend on your own personal circumstances - for example, will you receive full sick pay or do you have savings that you can rely on for a while?

Income protection payments are made in monthly (tax-free) instalments and will be a percentage of your gross salary (typically 50 - 70% but this can vary depending on the provider).

You’ll continue to receive payments until one of the following occurs:

  • You return to work
  • The payment period outlined in your policy comes to an end
  • You retire
  • Your policy expires

Types of long-term income protection

Typically, there are two policy options:

  1. Own occupation
  2. Suited tasks / suited occupation

Each policy type will have a defined level of incapacity that you’ll be covered for.

Incapacity refers to the inability to do something (in the case of income protection, as a result of being too ill or injured).

Cover can be more or less comprehensive depending on the policy type you choose.

Own occupation

An own occupation income protection policy will pay out to you if you cannot do any element of your job due to illness or an injury.

For this reason, this type of policy provides a higher level of cover than a suited tasks policy.


Suited tasks / suited occupation

With a suited tasks policy, you’ll only receive a pay out if you’re completely unable to do any type of work.

Your provider won’t pay out if there are other jobs that you can complete, even if these aren’t your usual job.

For example, if you’re a delivery driver and cannot perform this task due to an injury but you could work from the office helping with admin work.

As an own occupation policy will provide more cover, premiums tend to be slightly higher than with a suited tasks policy.

Although a suited tasks policy is usually cheaper, making a claim is not always straightforward.

This is because the definition of incapacity is smaller than an own occupation policy.

If you’re on a budget and want some form of cover in place, a suited task policy may suffice. However, if you’re looking for more comprehensive cover, an own occupation policy may be beneficial.

It’s also important to note that some providers may not be able to offer ‘own occupation’ cover to those with higher risk jobs, such as those in the military.

How much does long-term income protection pay out?

Long-term income protection will pay out a percentage of your gross salary.

Generally speaking, this will be between 50% - 70% (although this can vary depending on your provider).

Receiving state benefits, such as Universal Credit, can have an impact on how much is paid out to you.

How much you receive in income protection payments may also impact how much universal credit you receive. This is because income protection can be classed as ‘unearned income’.

If you’re looking at claiming state benefits and income protection due to long-term illness or disability, this is something to be aware of.

If you have another form of income, as well as your occupation, this will also be taken into consideration at the point of application.

The exact amount paid out to you will vary depending on your personal circumstances and the terms and conditions of your chosen policy.

To find the policy that best meets your needs and budget, it’s important to shop around and compare quotes.

How long does long-term income protection pay out for?

How long your income protection policy will pay out for will depend on a variety of factors:

  • The length of your policy
  • The length of your pay out period
  • When you return to work
  • Your planned retirement age (if you have taken out a policy with a term length and pay out period that will last until retirement)

Long-term income protection payments will continue until whichever of these events happens first.

If you’re suffering from a long-term illness or injury and are unable to return to work, it’s likely your payments will continue until your payment period comes to an end or until your policy expires.

If you make a recovery and are able to return to work, your payments will stop when you go back to work.

However, if you become unwell again and cannot work, it can be possible to make another claim (if this is permitted by your policy).

If you have a planned retirement age, you may choose to have your pay out period and policy term cease when you reach this age - thus giving you cover for your whole working life.

You have the flexibility to decide how long you would like your policy to pay out for at the point of application.

It’s important to be aware that your payments won’t commence as soon as you have made a claim.

You’ll need to wait for your deferred period to pass before you start to receive your payments.

Long-term income protection cost

You’ll need to pay monthly premiums to keep your cover valid.

The cost of long-term income protection will vary from one person to the next.

This is because premiums are calculated using information about your chosen policy as well as personal factors, including:

  • Age
  • Occupation
  • Lifestyle
  • Medical history
  • Smoking status
  • Policy length
  • Policy type
  • Percentage of salary paid out (typically between 50% - 70%)
  • Length of deferred/waiting period
  • Length of the payment period

Those with higher risk occupations may pay more for their cover to compensate for the increased risk they pose.

Typically, with income protection, occupations will be categorised into class groups based on risk.

Occupations that are more office-based, such as admin and professional roles may be in a low-risk class group.

More manual occupations, such as those in construction, may be in a higher risk class group.

Class groups will vary between providers, which emphasises the importance of comparing different quotes, as one provider may not deem you as risky as another.

Although some occupations may be deemed by the provider to be too risky to cover, particularly for an ‘own occupation’ policy type.

If you’ve struggled to secure income protection due to a risky occupation, you could consider alternative forms of cover such as critical illness cover.

For more information read our income protection insurance calculator article »

Why not use our award-winning broker service to compare quotes?

Making a claim

If you have an own occupation policy, making a claim will likely be a straightforward endeavour.

Upon the diagnosis of an illness or after becoming injured (as a result of an accident), that leaves you unable to work, you’ll be able to contact your provider to make a claim.

You may need to provide some medical evidence of your illness or injury as part of the claims process.

You may also need to supply a payslip as proof of your salary.

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

Long-term income protection or short-term income protection?

Long-term income protection Short-term income protection
Pays out for a longer period of time Pays out for a shorter period of time
Can pay out to you until retirement Typically pays out for up to 1 - 2 years
Covers you for accident and sickness only Depending on your policy type, you can be covered for accident, sickness and unemployment
Premiums tend to be higher than short-term income protection due to the longer length of cover Premiums tend to be cheaper than long-term income protection due to the shorter length of cover


While both types of income protection are designed to replace a percentage of your income should you become unable to work, there are some important differences to be aware of.

The main difference is the length of time the policy will pay out for.

Short-term income protection policies tend to pay out for up to 1 - 2 years, whereas a long-term income protection policy can pay out to you all the way up until retirement, (if you specify this at the point of application).

Due to this, premiums for long-term income protection tend to be more expensive to compensate for the higher level of cover.

It’s important to be aware that long-term income protection policies won’t pay out for unemployment, whereas you may have the option to include unemployment cover with a short-term income protection policy (if you have chosen this option).

If you’re worried about unemployment cover, depending on your budget, it’s possible to take out a long-term income protection policy and an unemployment only short-term income protection policy simultaneously.

(Please note that most providers aren’t currently offering unemployment cover to new customers due to the Coronavirus pandemic).

Alternatively, you could take out an unemployment only short-term income protection policy and a critical illness cover policy.

Use our award-winning broker service to compare both life insurance with critical illness cover and standalone critical illness cover quotes to find the best deal.

You can also read our guide to short-term income protection to get an understanding of both types of income protection.

Long-term income protection vs critical illness cover

Long-term income protection Critical illness cover
Pays out monthly (tax free) payments Pays out a tax free lump sum
Percentage of your salary will be paid out (typically 50% - 70%) Full sum assured can be paid out (or a percentage depending on your policy terms and the circumstances of your condition)
Can help to replace lost income Can help to replace lost income
Can be purchased alongside a separate life insurance policy or as a standalone policy Can be added to a life insurance policy or purchased as a standalone policy
Can claim for accident or sickness (as specified within your policy) Can claim for serious illness (the illness must be listed within your policy)
Pay outs will commence after the agreed deferred period has passed Pay out will commence once claim has been deemed valid
Payments will continue until you return to work, until you retire, until the payment period outlined in your policy comes to an end or until the policy expires (depending on which policy options you chose at the point of application) Once you have made a claim the policy will expire


Both policies provide pay outs to help cover lost income as a result of being too ill to work, but there are some key differences between these types of cover.

Long-term income protection pays out monthly (tax-free) payments if you’re unable to work for a prolonged period of time due to accident or sickness.

Payments can be used to cover daily living expenses, as well as mortgage and rental payments.

Critical illness cover will pay out a tax-free lump sum if you’re diagnosed with a specific serious illness (listed within the policy).

This lump sum can help to pay off your mortgage, pay for any necessary adaptions to your home, as well as fund private medical treatment and cover your daily living costs.

You won’t be covered for accidental injury with critical illness cover, but some policies do include total disability.

Critical illness cover can be added to a life insurance policy to provide an additional layer of protection.

While income protection can’t be added to a life insurance policy, it’s possible to take out both a life insurance policy and income protection policy simultaneously (depending on your budget).

Both policy types can also be purchased as standalone products.

We can’t compare long-term income protection policies for you at Reassured but our award-winning team can compare critical illness quotes on your behalf - as part of a life insurance policy or on its own.

Simply get in touch.

Find out more by reading our complete income protection vs critical illness cover guide.

Do I need long-term income protection?

If you were unable to work for a prolonged period of time would your personal savings, or other forms of income, be able to cover:

  • Your mortgage or rent payments
  • Bills and utilities
  • Family and daily living costs
  • Childcare costs

Those with a family, and/or a mortgage, may benefit from having long-term income protection in place to help cover all of these costs should you be left unable to work.

If you’re self-employed you may also benefit from long-term income protection, as you won’t benefit from full sick pay from an employer.

Long-term income protection payments can help to keep you afloat if you’re unable to work due to illness or injury.

Due to the longer cover length (compared to short-term income protection), you have the opportunity to be covered up until retirement - giving you protection for your whole working life.

You may not need long-term income protection if you receive full sick pay, have a large amount of savings, have another form of income or have other forms of cover in place (such as critical illness cover).

Whether you need long-term income protection will largely depend on your own personal circumstances.

Talking to an expert can help you understand your available options to help you make a fully informed decision.

Long-term income protection insurance UK - Compare quotes

Comparing quotes is essential to securing the best deal on a policy that meets all of your needs.

Unfortunately, long-term income protection isn’t something we can compare for you at Reassured.

We can, however, compare life insurance with critical illness cover from some of the UK’s leading insurers.

Our award-winning team does all the hard work for you and compares quotes on your behalf, helping you to save time and money.

Our cover starts from as little as 20p-a-day* and we don’t charge a fee for our quotes.

Why not get in touch?

Related articles:

Very easy to understand and very quick

Yes very pleased with my choice very helpful easy to understand and very pleasant transaction all good!

Mrs M Rushworth

Very professional and reassuring

Very professional and reassuring. Life insurance sorted in about 10 minutes.

Stephen Davies

very courteous and friendly

very courteous and friendly. Polite professional and empathic.

Stedroy Fenton

Another happy customer

Another happy customer I am. They are very professional and kind. Fully communicative. I recommend.

Piotr Stepien

Really attentive during the call

Really attentive during the call, good clear guidance throughout. Well done.

Michael Reynolds

Amazing service

Amazing service quick fast and easy and Joey was a star on the phone really help me thanks.

Sera Woolley

I made the right choice and now I feel…

I made the right choice and now I feel relieved that I did.

glyn

Really genuine kind and compassionate…

Really genuine kind and compassionate team with great knowledge and friendly approach highly recommend them!

Katelia Merritt

I must say Jake took me through every…

I must say Jake took me through every step and was brilliant, recommend them anytime.

Allan Green

Very happy and everything explained…

Very happy and everything explained well, so glad a took the time to take the call, normally I would say I'm busy. But compared to other company's we save so much more money.

Jenny Berry