Your income pays for almost everything else in your life: your home, food, utilities, travel, family costs, savings and pension contributions. Yet while many people insure their possessions, their income is often left largely unprotected.
Income protection insurance is designed to provide a regular payment if illness or injury prevents you from working.
What is income protection insurance?
Income protection is designed to replace part of your earnings when you are unable to work because of illness or injury. After an agreed deferred period, the policy can pay a monthly benefit until you return to work, recover sufficiently, reach the end of the claim period, retire or reach the policy end date.
Why is protecting your income important?
Your normal commitments often continue even when earnings stop. An emergency fund can provide useful short-term support, but a long absence may quickly use up even a well-established reserve.
- Mortgage or rent
- Council tax
- Gas and electricity
- Food and household shopping
- Car payments and travel
- Childcare
- Insurance
- Loans and credit commitments
- Pension and savings contributions
How much is Statutory Sick Pay?
From 6 April 2026, eligible employees can receive Statutory Sick Pay from their first full day of sickness absence. For the 2026/27 tax year, the weekly payment is the lower of £123.25 or 80% of average weekly earnings. It can normally be paid for up to 28 weeks. Some employers provide enhanced sick pay, so check your contract.
What if I am self-employed?
Self-employed people do not usually receive employer sick pay or Statutory Sick Pay through their self-employment. The financial impact of being unable to work can therefore begin immediately.
- Tradespeople
- Contractors
- Consultants
- Beauticians and hairdressers
- Drivers
- Fitness professionals
- Healthcare professionals
- Freelancers
- Sole traders
Do income protection policies pay claims?
The Association of British Insurers reported a record £209 million in individual income protection payments during 2025. Musculoskeletal problems were the most common cause of claims. Mental health conditions accounted for 19% of claims, with £39 million paid to people affected by mental ill health. The average individual claim was £10,700, while 7,600 people returned to work with the help of claim payments and insurer-provided health services.
How much of my income can I insure?
Income protection usually covers a proportion of pre-tax earnings rather than the full salary. The maximum available varies between insurers and can depend on salary, dividends, pension contributions, state benefits, employer sick pay and other insurance.
What is a deferred period?
The deferred period is the time you must remain unable to work before payments begin. A longer deferred period will often reduce the premium, but you need sufficient savings or sick pay to cover the gap.
- Four weeks
- Eight weeks
- Thirteen weeks
- Twenty-six weeks
- Fifty-two weeks
How long can income protection pay?
Short-term policies may pay for one, two or five years. Long-term cover can potentially continue until you recover, retire or reach the policy end date.
What does “own occupation” mean?
Under an own-occupation definition, the insurer assesses whether you can perform your own job. Suited-occupation and any-occupation definitions are broader and can be harder to claim under. Where available and affordable, own occupation is often preferable.
Does income protection cover mental health and back problems?
Many policies can cover absence caused by mental health and musculoskeletal conditions, subject to underwriting, exclusions and the incapacity definition. Some insurers also provide virtual GP services, mental health support, physiotherapy, rehabilitation and return-to-work assistance.
Can company directors arrange income protection?
Yes, although the most suitable structure depends on how the director is paid and whether the policy is owned personally or by the company. Tax treatment should be reviewed carefully with an adviser and accountant.
How much does income protection cost?
Premiums are influenced by age, health, smoking status, occupation, income, benefit amount, deferred period, claim duration, policy term and whether premiums are guaranteed or reviewable. The cheapest policy is not always the most suitable.
Income protection advice in Aberdare
Chris Hopkins helps employed people, self-employed workers and company directors protect their income. A review can calculate essential expenditure, check sick pay, review emergency savings, identify a suitable deferred period and compare policy definitions.
Considerations
Income protection policies have exclusions and limitations. The amount and duration of payment depend on the policy terms, your earnings and the insurer’s assessment of incapacity. Income Protection plans may affect your ability to obtain means tested state benefits.
Benefits may also be reduced if you receive benefits and/or other regular income.
Income Protection plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.
Frequently asked questions
Can I claim income protection if I lose my job?
Standard income protection generally covers incapacity caused by illness or injury, not redundancy.
Can I arrange cover if I already have a medical condition?
Possibly. The insurer may offer standard terms, increase the premium, exclude a condition or decline the application.
Can I have income protection alongside critical illness cover?
Yes. Income protection provides a monthly benefit, while critical illness cover normally pays a lump sum following a qualifying diagnosis.
Will the policy pay if I can still do some work?
This depends on the policy. Some provide proportionate or rehabilitation benefits when you return part-time or in a lower-paid role.
Is income protection worthwhile if I have savings?
Savings are an important first line of defence. Income protection is intended to help where absence lasts longer than your savings can comfortably support.
| Book an initial income protection appointment
How long could you continue paying your mortgage, rent and household bills if illness or injury stopped you working? Review your sick pay, savings and monthly expenditure. Call: 07368 882092 Email: chris.hopkins@cardiffifa.co.uk BOOK YOUR INITIAL APPOINTMENT Appointments are available face-to-face in Aberdare, by telephone or online. |
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