What does income protection insurance cover?

Income protection (or income protection insurance) will pay out a regular income to you if you can’t work for an extended period of time due to sickness or injury.

The amount paid out to you will be a percentage of your annual income, this is typically between 50% - 70%.

This will help you to cover essential financial commitments while you’re unable to earn your usual income.

Income protection payments aren’t tied to a specific financial commitment, so you can use them to cover whatever you would spend your normal monthly income on.

This could be to cover:

  • Monthly rent or mortgage payments
  • Household bills (gas, electric, water, council tax, broadband, etc)
  • Childcare costs
  • Transportation costs (petrol, train or bus fare)
  • Credit card bills
  • Loan payments (personal loans, car finance, etc)
  • Food shop
  • Leisure costs (gym membership, Spotify, Netflix etc)
  • Other living daily costs

Why not let Reassured Advice help you find the right income protection cover to meet your unique needs?

Reassured Advice can help you to compare quotes from the whole of market. Their service is FCA-regulated and quotes are fee-free, personalised and without obligation.

What illnesses does income protection cover?

There’s no set list of illnesses or injuries that you’ll be covered for with an income protection policy.

This means you’ll be covered for a wide range of illnesses and injuries.

This differs to other policies available, such as critical illness cover, where a specific list of illnesses will be included in your policy and your illness must match the insurers definition in order for you to make a claim.

Leading provider, Aviva, found that in 2020 the most common income protection claims included:

Reason for claimPercentage of claims
Musculoskeletal29.5%
Mental health23.8%
Cancer8.7%
Heart attack/stroke1.7%
Other36.4%

Source: https://www.aviva.co.uk/adviser/documents/view/pt151147-2020_individual_protection_claims_report.pdf

When comparing quotes through Reassured Advice, an expert will be on hand to answer any questions you may have. This way you can ensure that the policy you’re taking out is exactly what you need.

Simply contact Reassured Advice for your free quotes.

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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What does income protection not cover?

While income protection covers a wide range of illnesses and injuries, there are some things that won’t be covered under your policy.

This includes:

  • Unemployment (this includes redundancy)
  • Pre-existing medical conditions
  • Any illness or injury that occurs as a result of drug misuse
  • Any self-inflicted illnesses and injuries

To find out exactly what you’ll be covered for, compare quotes for free through Reassured Advice.

How does income protection work?

An income protection policy works by paying out a percentage of your income to replace lost earnings, while you’re unable to work, as a result of sickness or injury.

You’ll pay a monthly premium to keep your cover valid and, if you become unable to work, you can make a claim on your policy.

In order to receive your monthly payments, you’ll need to wait for your deferred period to pass.

The deferred period is the period of time you must be unable to work before your payments will commence.

If you’re still unable to work once your deferred period has come to an end then you’ll start to receive your payments.

These payments will continue until one of the following happens (whichever happens first):

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

There are some aspects of an income protection policy that you should be aware of:

Insurance TermDescription
Policy termThe policy length refers to the period of time in which you’ll be covered for, this can also be known as the policy ‘term’.
Benefit amountThis is the amount that will be paid out to you after a claim. Often referred to as ‘monthly benefit amount’ as you will receive your payments on a monthly basis.
Payment periodThis is how long you will receive payments for after a claim. If taking out short term income protection, this will be capped at 1 - 2 years. If taking at a long-term income protection policy, it’s possible to opt for a much longer payment period.
Deferred periodThis is the period of time which will need to pass before your payments commence after making a claim. Your payments won’t begin until this time has passed. Most common deferred periods are between 4 - 52 weeks.
Definition of incapacityThis will outline the terms of your policy can and what you can claim for. Typically, there are 3 main definitions of incapacity:
  • Own occupation - This is the most straightforward and most common definition. You’ll be able to make a claim if you’re unable to do your specific job
  • Suited tasks (or suited occupation) - This definition requires you to be unable to do your own job, as well as other jobs that are suited to your skills and experience, for a claim to be accepted
  • Any occupation - This definition requires you to be unable to work in any job for a claim to be accepted
Premium typeThis outlines how you will pay for your income protection policy. You’ll need to pay a monthly premium to keep your cover valid. Common premium types include:
  • Guaranteed - Your premiums will remain the same throughout the policy lifetime
  • Reviewable - Your premiums may change due to certain factors (this could be your age or change in risk)
  • Age-banded - Your premiums will increase each year as you age (this increase is usually at a guaranteed rate)

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What is income protection infographic desktop


Compare multiple quotes through Reassured Advice to find the best income protection insurance at the right available price.

How long will income protection cover me for?

How long income protection will cover you for will depend on the terms that you choose for your policy.

When taking out income protection you’ll need to consider:

How long you want your policy term to be?

The length of your policy is also known as the policy term and this will be how long you’re covered for.

This means that you’ll be able to make a claim at any time throughout this period and it can even be possible to make multiple claims during this time (each claim period will need to have come to an end before another claim can be made).

When choosing a policy term you may want to consider certain factors such as the length of your mortgage, how old your children are or how long until you reach retirement to ensure you’re covered for as long as necessary.


How long you want to receive payments for?

As well as choosing a policy term, you’ll need to choose how long you’d like to receive payments for.

Income protection can be taken out with a short-term or long-term payment period.

Short-term income protection will pay out to you for a maximum of 1 - 2 years whereas with long term income protection you have the freedom of choosing a payment period to meet your needs (this could be up until you reach retirement)

We have in-depth guides on both short-term income protection and long-term income protection if you require additional information.

Does income protection cover you if you lose your job?

No, income protection will not pay out to you if you lose your job.

This is because an income protection policy doesn’t cover unemployment or redundancy.

Income protection only pays out for sickness and injury as a result of an accident.

If looking for cover that will protect you in the event of unemployment, you may consider a policy such as Accident, Sickness and Unemployment (ASU).

Accident, Sickness and Unemployment isn’t something that’s currently offered by Reassured or Reassured Advice.

Will income protection pay out if I die?

No, the purpose of an income protection policy is to pay out to you during your working life in the event that you become incapacitated and unable to work.

This means the policy will only pay out to you in the event of sickness or injury.

However, some providers may offer a small lump sum payment to your loved ones if you pass away while your policy is active, but this is unlikely to cover all costs for your loved ones (please note not all policies will include this).

If looking for financial protection that will pay out upon your death, you may consider a life insurance policy.

A family life insurance policy will provide your loved ones with a cash lump sum pay out after your passing.

This can help them to cover:

  • Mortgage or rent payments
  • Funeral costs
  • Future family living costs
  • Additional childcare costs
  • An inheritance

Life insurance through Reassured

Protect your loved ones and secure life insurance through Reassured from just 20p a day.

Our team of experts can talk through your needs and help you to compare quotes from some of the UK’s best life insurance providers.

Our quotes are personalised, fee-free and without obligation, so why not get in touch?

Can you work while on income protection?

No, you won’t be able to make a claim on your income protection policy if you’re still able to work.

As income protection is designed to replace lost income, if you’re still able to earn the income that’s protected, it’s unlikely a claim will be accepted.

In order to make a claim, and receive payments, you must meet the definition of incapacity outlined in your policy.

Is income protection paid monthly?

Yes, income protection pays out in monthly (tax-free) instalments.

This is to mimic the monthly income that you would be earning if you were working.

Why not enquire with Reassured Advice about protecting your income? They can help you to compare quotes from the whole of the market to ensure you find your ideal policy.

Do you get taxed on income protection payments?

No, income protection payments are tax-free.

This is why providers pay out a certain percentage of your income, rather than the total amount.

Income protection through Reassured advice starts from just 20p-a-day why not just in touch for your fee-free, personalised quotes.

Is it worth taking out income protection?

Anyone who doesn’t have alternative sources of income, with financial commitments and/or a family to take care of can benefit from having income protection in place.

Income protection can prevent you from needing to rely on financial help from others, dip into your savings or make changes to your lifestyle when you’re unable to earn your usual income.

In particular, income protection may be a worthwhile investment if you’re self-employed.

This is because self-employed workers won’t receive sick pay from an employer, so income protection could provide much needed financial aid.

If you’re not sure whether income protection is the right choice for you, it’s always worth speaking to an expert.

The team at Reassured Advice can talk through your needs and provide you with all the information you need to help you make a decision.

Compare income protection quotes

Hopefully this article has helped to answer the key question ‘what does income protection cover?

To secure the best income protection policy to meet your needs, it’s essential to compare multiple quotes.

Reassured Advice can help you to do this with their FCA-regulated broker service.

The team of experts can help you to compare quotes, guide you through the application process and be on hand to answer any questions.

Income protection through Reassured Advice starts from just 20p-a-day so why not get in touch?

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