Income Protection Insurance UK 2026 — Is It Worth It? Costs and How It WorksShould I Get Income Protection Insurance? — Who Needs It and Why
Is income protection insurance worth it? Who needs it, what it covers, how much it costs, and how to decide if you need protection against being unable to work.
If you are comparing life cover, critical illness, and income-security routes together, start with the Life Insurance Hub for the full decision framework.
Income protection insurance pays you a regular income if you can’t work due to illness or injury. Here’s how to decide if you need it.
What Income Protection Covers
| Feature | Detail |
|---|
| What it pays | Monthly income (typically 50-70% of salary) |
| Trigger | You can’t work due to illness or injury |
| Duration | Until you recover, retire, or policy ends |
| Tax status | Payments are tax-free (if you pay premiums personally) |
| Conditions covered | Any illness or injury that stops you working |
| Exclusions | Usually pre-existing conditions (varies by policy) |
Why You Might Need It
Statutory Sick Pay Is Minimal
| Support | Amount | Duration |
|---|
| Statutory Sick Pay (SSP) | £116.75/week | Up to 28 weeks |
| Employment and Support Allowance | £90.50-£138.20/week | After SSP ends (assessed) |
| Universal Credit | Varies | Means-tested |
| Income protection | 50-70% of salary | Until recovery/retirement |
On a £35,000 salary (£2,333/month net), SSP would give you just £467/month — a 80% pay cut.
Self-Employed Get Nothing
Self-employed people have no employer sick pay and no SSP. If you can’t work, your income drops to zero immediately unless you have insurance.
Who Needs Income Protection Most
| Priority | Situation |
|---|
| Essential | Self-employed with no sick pay |
| Essential | Single income household with dependants |
| Essential | Mortgage or rent with no other payer |
| High | Main earner in a couple |
| High | Limited savings (under 3 months expenses) |
| Medium | Dual income with good savings |
| Lower | Extensive savings or passive income |
| Lower | Employer offers generous long-term sick pay |
Who Might Not Need It
| Situation | Why you might skip it |
|---|
| Large emergency fund (12+ months) | Self-insured through savings |
| Partner’s income covers all bills | No financial gap if you’re off work |
| Employer long-term sick pay | Already protected (check duration) |
| Near retirement | Limited benefit period remaining |
| No dependants, low outgoings | Minimal financial impact |
Types of Income Protection
| Type | How it works | Best for |
|---|
| Long-term income protection | Pays until recovery or retirement | Comprehensive cover |
| Short-term income protection | Pays for 1-2 years | Budget option |
| Accident, Sickness & Unemployment (ASU) | Covers job loss too | Broader but shorter-term |
| Mortgage payment protection | Covers mortgage only | Homeowners wanting basic cover |
Key Choices When Buying
Deferral Period (Waiting Period)
The time between becoming unable to work and your first payment:
| Deferral period | Effect on premium | Best for |
|---|
| 4 weeks | Most expensive | No sick pay or savings |
| 8 weeks | Moderate | Limited sick pay |
| 13 weeks | Cheaper | Medium employer sick pay |
| 26 weeks | Cheapest | Good sick pay or savings |
Strategy: Set the deferral to match your employer’s sick pay or savings buffer. If your employer pays full sick pay for 3 months, choose a 13-week deferral.
Benefit Amount
| Coverage level | Monthly benefit (£35,000 salary) | Typical premium |
|---|
| 50% of salary | ~£1,167/month | Lower |
| 60% of salary | ~£1,400/month | Medium |
| 70% of salary (max typical) | ~£1,633/month | Higher |
Most people choose 50-60%. Remember the payments are tax-free, so they go further than your gross salary suggests.
Premium Type
| Type | How it works |
|---|
| Guaranteed premiums | Price fixed for life — more expensive initially |
| Reviewable premiums | Cheaper initially but insurer can increase |
| Age-banded | Increases at set intervals regardless |
Guaranteed premiums cost more upfront but give certainty.
Typical Monthly Costs
| Age | Non-smoker, office worker | Manual worker | Self-employed |
|---|
| 25 | £15-£25 | £25-£45 | £20-£35 |
| 30 | £20-£35 | £30-£55 | £25-£45 |
| 35 | £25-£45 | £40-£70 | £30-£55 |
| 40 | £35-£60 | £55-£95 | £45-£75 |
| 45 | £50-£85 | £75-£130 | £60-£100 |
Based on £1,500/month benefit, 8-week deferral, to age 67.
Income Protection vs Critical Illness vs Life Insurance
| Feature | Income Protection | Critical Illness | Life Insurance |
|---|
| Pays for | Can’t work (any illness) | Specific named illness | Death |
| Payment type | Monthly income | Lump sum | Lump sum |
| Duration | Until recovery | One-off | One-off |
| Conditions | Any qualifying illness | Listed conditions only | Death (or terminal diagnosis) |
| Cost | Medium | Higher | Lower |
| Most useful for | Ongoing bills | Major financial shock | Dependants/mortgage |
Decision Checklist
- What happens if you can’t work for 6 months? → If you’d be in serious trouble, you need cover
- Does your employer offer long-term sick pay? → Check duration and amount
- How much savings could cover? → Set deferral period to match
- Are you self-employed? → Strongly consider income protection
- Do you have dependants? → Higher priority for cover