If you're looking for peace of mind that your income won’t disappear if life takes an unexpected turn, income protection insurance could be the answer. In this guide, we’ll explain how income protection works, highlight some of the top UK insurance providers, and share tips on how to get accurate, competitive quotes to ensure you’re properly covered.
What is income protection insurance?
Income protection insurance is designed to provide a regular income—similar to a replacement wage—if you're unable to work due to illness or injury.
Unlike life insurance or critical illness cover, which typically offer a one-off lump sum, income protection delivers ongoing monthly payments. These help cover essential living costs and support your household finances until you’re able to return to work, reach retirement, or the policy term ends.
How does it work?
When you take out an income protection insurance policy, you’ll pay a monthly premium to maintain your cover. If you're unable to work due to an illness or injury that falls within the terms of the policy, the insurer will provide a regular replacement income.
Typically, the payout is up to 70% of your gross salary, paid in monthly instalments. Most policies include a deferred period—this is the waiting time between stopping work and when the payments begin (e.g. 4, 8, or 13 weeks).
Types of Income Protection Policies
There are several types of income protection, each with its own purpose and level of flexibility:
-
Individual Income Protection
A personal policy tailored to your specific needs, income, and employment status. You can choose the level of cover, benefit period, and deferred period. -
Group Income Protection
Often offered as an employee benefit through your employer. It provides a safety net if you're unable to work due to health issues. While it’s cost-effective, it may come with standardised cover and limitations, and tax implications can vary. -
Short-Term Income Protection
Covers you for a fixed duration, typically 1, 2, or 5 years. It’s more affordable but provides limited long-term security. -
Long-Term Income Protection
Offers coverage potentially until retirement, making it more comprehensive. While premiums are generally higher, the long-term support can be invaluable if you’re dealing with a prolonged condition.
What Does Income Protection Cover?
The scope of cover depends on the specific policy and insurer, but income protection may cover:
-
Illness that prevents you from performing your usual work duties
-
Injury that incapacitates you or makes work impossible
-
Mental health conditions, such as depression, anxiety, or stress (depending on the insurer)
You can often make multiple claims over the life of the policy, as long as it's active and premiums are up to date.
Occupation-Based Definitions
Income protection policies are usually defined by how your inability to work is assessed:
-
Own Occupation – Pays out if you can’t perform the job you currently do
-
Suited Occupation – Pays out if you can’t work in a role that matches your qualifications and experience
-
Any Occupation – Pays only if you are unable to perform any kind of work at all
Because terms and cover can vary significantly between providers, it’s essential to review policy documents carefully or speak with a professional to ensure you’re choosing the most suitable protection for your situation.
Does income protection cover redundancy?
In most cases, income protection insurance does not cover redundancy. It is specifically designed to provide financial support if you're unable to work due to illness or injury—not job loss for other reasons.
However, some insurers offer unemployment protection or redundancy insurance as a separate product or optional add-on. These policies may provide short-term financial support if you’re made redundant, but they typically have different terms, eligibility criteria, and exclusions, so it’s important to review them carefully before committing.
How your application gets assessed
When applying for income protection insurance, insurers assess several key factors to determine both your eligibility and the cost of your premiums. Here’s what they typically consider:
Your Occupation
The type of work you do plays a major role. Jobs in higher-risk sectors—such as construction, emergency services, or manual labour—may lead to higher premiums or more limited cover, as insurers view them as more likely to result in injury or time off work.
Level of Cover
The proportion of your income you want to protect affects your monthly cost.
-
Example: A policy replacing 50% of your salary will generally be cheaper than one replacing 70%.
Type of Cover
Short-term income protection (e.g. 12 or 24 months of cover) is usually less expensive than long-term policies that pay out until you return to work or retire.
Deferred Period
This is the waiting period before benefits begin after you stop working.
-
Longer deferred periods (e.g. 13 or 26 weeks) reduce premiums
-
Shorter deferred periods offer quicker support but cost more
Premium Structure
You may be able to choose between:
-
Guaranteed premiums – Stay the same for the life of the policy
-
Reviewable or age-banded premiums – May increase over time, based on age or insurer reviews
Occupation Cover Type
-
Own occupation: Pays if you can’t do your specific job (highest likelihood of payout, but more expensive)
-
Suited occupation: Pays if you can’t work in a role that matches your experience/skills
-
Any occupation: Pays only if you’re unable to perform any job (lowest premiums, but hardest to claim)
Age, Health & Lifestyle
Insurers will also look at your:
-
Age – Premiums typically rise as you get older
-
Medical history – Pre-existing conditions can impact cost or eligibility
-
Lifestyle habits – Factors like smoking, alcohol consumption, and physical activity levels influence risk and premiums
Getting the right balance between cost and cover is key, so it’s always worth comparing options and speaking with a specialist to tailor a policy that fits your circumstances.
Is income protection insurance worth it?
Whether income protection insurance is right for you largely depends on your financial situation and whether you have dependants who rely on your income. For many, having adequate cover in place is essential to maintain their standard of living in the event of unexpected illness or injury.
Income Protection vs Critical Illness Cover
While both types of insurance provide valuable financial support, they serve different purposes:
-
Income Protection Insurance
Provides a regular income (typically monthly) if you're unable to work due to illness or injury. It supports your day-to-day expenses until you can return to work, reach retirement, or your policy ends. -
Critical Illness Cover
Pays out a one-off lump sum if you're diagnosed with a serious illness listed in your policy. This payout can be used however you choose—such as covering medical costs, paying off debts, or making adjustments to your home.
Income Protection vs Life Insurance
The primary difference between income protection and life insurance lies in when and how the benefit is paid:
-
Income Protection Insurance
Provides regular monthly payments to support you financially if you're unable to work due to illness or injury. It’s designed to help you maintain your lifestyle and meet essential expenses while you recover. -
Life Insurance
Pays out a lump sum to your chosen beneficiaries if you pass away during the policy term. This helps your loved ones cover costs such as mortgage repayments, daily living expenses, or funeral costs.
Income Protection vs Personal Accident Cover
While income protection and personal accident cover can seem similar at first glance, they differ significantly in how they provide support and what they cover:
-
Income Protection Insurance
Pays a regular monthly income if you're unable to work due to illness or injury—including both physical and mental health conditions. It helps cover ongoing living costs until you recover, retire, or your policy ends. -
Personal Accident Cover
Typically provides a one-off lump sum payout in the event of a specific physical injury, such as a broken bone, loss of a limb, or permanent disability. It does not cover illness, and is generally more limited in scope.
Do you need income protection?
Here are some important questions to ask yourself when considering whether this type of cover is right for you:
-
Could you afford to cover your household expenses for an extended period if you were unable to work?
Think about your mortgage or rent, bills, groceries, and other essentials. -
Is there someone else in your household who could replace your lost income?
Would a partner or another family member be able—and willing—to shoulder the financial burden? -
Would state support and benefits, such as Statutory Sick Pay, be enough to meet your financial needs?
For many, this support falls short of covering even the basics. -
Could you realistically take early retirement and live comfortably?
If you're far from retirement age, this likely isn’t an option without significant savings. -
Does your employer offer income protection or a generous sick pay scheme?
Some companies provide group income protection—check what’s included in your benefits package. -
Would a partner or family member be able to support you financially on a long-term basis?
Relying indefinitely on loved ones may not be a sustainable or fair solution.
How much does income protection cost?
The cost of an income protection policy can vary significantly based on your personal circumstances and the insurer you use.
To give you an idea about costs, here are some rough examples based on someone in a low-risk occupation who’s a non-smoker, paying out 60% of a £40,000 annual salary for 24 months with various deferred periods:
| Age | Monthly cost of income protection | Monthly payment | Deferred period |
| 25 | £10 - £30 | £2,000 | 30 days |
| 35 | £16 - £40 | £2,000 | 30 days |
| 45 | £25 - £58 | £2,000 | 30 days |
| 55 | £44 - £134 | £2,000 | 30 days |
The table below shows example quotes with a 60-day deferred period.
| Age | Monthly cost of income protection | Monthly payment | Deferred period |
| 25 | £9 - £28 | £2,000 | 60 days |
| 35 | £13 - £32 | £2,000 | 60 days |
| 45 | £19 - £46 | £2,000 | 60 days |
| 55 | £36 - £111 | £2,000 | 60 days |
The above quotes are purely for example purposes and may be different to the premiums you qualify for based on your personal circumstances.
Best insurance providers in the UK
The best income protection provider for you will depend on your personal circumstances, budget, and how much cover you need. Here are some well-known UK insurers offering competitive and flexible income protection options:
Aviva
-
Offers ‘Living Costs Protection’ which pays between £500 and £1,500 per month for up to 12 months per claim.
-
You can make multiple claims, but you must return to work for at least 16 hours a week for six consecutive months before claiming again.
-
Ideal for those looking for basic short-term support.
Vitality
-
Encourages healthy living by offering a 20% payout boost for six months if you stay active.
-
Highly customisable policies—you can adjust your level of cover, deferred periods, and benefit duration.
-
Best suited for those who want flexibility and value-added wellness rewards.
LV= (Liverpool Victoria)
-
Offers comprehensive, tailored policies with a wide range of deferred periods and benefit levels.
-
You can get cover for up to £8,000 per month, subject to income verification.
-
Includes rehabilitation support services to aid your return to work.
Legal & General
-
Known for offering guaranteed premiums, giving cost certainty throughout your policy.
-
Pays up to 60% of your gross income on earnings up to £60,000, and 50% on income above that threshold.
-
Includes rehabilitation support as part of the policy.
Frequently Asked Questions
No, although there is crossover between the products as Payment Protection Insurance (PPI) is a type of unemployment insurance, which does fall under the income protection umbrella.
PPI covers specific loan or credit repayments. Income protection is broader and covers your general income, helping with bills, mortgage payments, and living costs.