Income Protection Guide
Protecting your income if illness or injury stops you working
Who this is for
- You're self-employed or a contractor with no sick pay safety net
- You want to protect your income, not just cover death scenarios
- Your family depends on your earnings to pay bills and maintain their lifestyle
- You're concerned about long-term illness preventing you from working
- You want comprehensive protection that covers you until recovery or retirement
What this cover helps with
Income protection replaces a portion of your earnings (typically up to 60%) if you can't work due to illness or injury. Unlike life insurance, it supports you while you're alive but unable to earn.
Key outcomes:
- Your income continues even if you're unable to work
- Bills, mortgage payments, and living costs are covered
- You avoid depleting savings or relying on inadequate state benefits
- Your family maintains financial stability during your recovery
- Long-term protection until you return to work, retire, or the policy ends
Common cover types and options
Own Occupation Cover
Pays out if you can't perform your specific job. The gold standard for income protection, especially valuable for self-employed and professionals. More expensive but offers superior protection.
Any Occupation Cover
Only pays out if you can't do any job suited to your skills and experience. Cheaper than own occupation but less protective, as insurers have higher claim thresholds.
Short Deferred Period (4-8 weeks)
Payments start quickly after you're unable to work. More expensive but useful if you have minimal savings or need support sooner.
Long Deferred Period (13-52 weeks)
You wait longer before payments begin. Premiums are significantly lower, suitable if you have savings to cover short-term gaps.
Guaranteed vs Reviewable Premiums
Guaranteed premiums stay fixed. Reviewable premiums can increase based on insurer claims experience, but start cheaper. Guaranteed offers more certainty.
Benefit Amount
Typically insure 50-60% of your gross income. Too much can discourage recovery (moral hazard), too little leaves you financially exposed. I'll help you find the right balance.
Pros and considerations
Benefits
- Replaces income while you're alive but unable to work
- Own occupation cover protects your specific profession
- Pays out until you return to work, retire, or the policy ends
- Premiums may be tax-deductible for self-employed (check with your accountant)
- Covers long-term illness, not just short-term absence
- Essential for self-employed who have no employer sick pay
Considerations
- Can be expensive, especially for older applicants or manual occupations
- Deferred periods mean you need savings to cover initial weeks
- Any occupation definitions are less generous than own occupation
- Pre-existing conditions are typically excluded
- Mental health claims can be limited (e.g., 12-24 month maximum payouts)
- Proving income for self-employed requires accounts or tax returns
What affects cost and acceptance
Several factors influence both the price of your cover and whether insurers will accept your application:
Insurers and options
I compare leading UK insurers specialising in income protection. Definitions, deferred periods, and underwriting vary significantly. Some are better for self-employed, others for employed professionals. I'll find the best match for your occupation and circumstances.
Important: Availability and suitability vary based on your individual circumstances, health, and requirements. I'll recommend what fits you best after understanding your specific situation.
Frequently asked questions
How much income can I insure?
Most insurers allow you to insure 50-60% of your gross income. This prevents over-insurance (moral hazard) while providing meaningful support. For self-employed, you'll need recent accounts or tax returns to prove earnings.
What's the difference between own occupation and any occupation?
Own occupation pays if you can't do your specific job (e.g., as a plumber or accountant). Any occupation only pays if you can't do any job suited to your skills. Own occupation is more protective but costs more.
How long should my deferred period be?
It depends on your savings buffer. If you can manage 3-6 months without income, a 13 or 26-week deferred period will reduce premiums significantly. If you need support sooner, choose 4 or 8 weeks.
Does income protection cover mental health conditions?
Yes, but many policies limit mental health claims to 12-24 months. This is an important consideration when comparing policies. Some insurers offer better mental health terms than others.
Can I claim income protection premiums as a business expense?
Usually yes, if you're self-employed and the policy is for business purposes. However, benefits may then be taxable. Check with your accountant for your specific situation.
What if my income fluctuates year to year?
Income protection is typically based on your average earnings over recent years. Some policies allow you to increase cover if your income grows, or you can review and replace the policy as circumstances change.
Will I still get income protection if I can work part-time?
Some policies offer proportionate benefits, paying a percentage of your benefit if you return to work part-time. This supports gradual recovery without penalising you for trying to work.
Is income protection different from critical illness cover?
Yes. Income protection pays a regular income if you can't work due to any illness or injury. Critical illness pays a lump sum only if you're diagnosed with a specific serious condition. They address different risks.
Let's make sure you're covered properly
I'll search the whole market, explain your options in plain English, and help you make an informed decision. No pressure, no jargon.
Please note: The information on this page is for general guidance only and does not constitute personal advice. Your individual circumstances, health, and requirements will determine what cover is suitable and available to you.
The Right Broker Ltd is an Appointed Representative of The Right Mortgage Ltd, which is authorised and regulated by the Financial Conduct Authority. (FCA number 715860).