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Income protection insurance

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  • Get a quote to protect you against a loss of income

  • Insure up to 70% of your gross salary free of tax

  • Compare quotes from AIG, Aviva, Legal & General, and more!

Covid-19 important information

Due to the coronavirus outbreak, you can only get cover for accident and sickness. Policies that protect you against the loss of income if you lose your job through redundancy or involuntary unemployment, are currently unavailable.

We’ve put together a guide on income protection and coronavirus for more help.

If you’re looking for longer term cover for something like your mortgage, another option might be a mortgage life insurance quote.

Last updated 1 March 2021

What is income protection insurance?

Income protection refers to a range of insurance policies designed to ensure you’ll continue to receive an income if you’re unable to work due to illness or disability. While you can’t receive 100% of your salary, you can typically get 70% of your income before tax.

There are several different types of cover available, with short term policies that generally pay out for up to two years, and long-term policies that will pay until you can return to work or your retirement age. So you can choose a policy suited to your lifestyle and circumstances.

Please note that income protection is completely separate from other types of insurance, including a health insurance policy.

What does income protection insurance cover?

Depending on the type of cover you choose, income protection insurance can help assist you, your family or dependants with a regular payment while you’re sick or unable to work.

A typical policy will cover things like:

  • Your mortgage or rent
  • Household bills
  • Other expenses that you may have to help you maintain your standard of living

It’s worth looking at your savings, and the sick pay you’d get from your job, to see if it could cover your rent or mortgage, household bills and cost of living while you’re out of work.

What are the benefits of an income protection policy?

The main benefit of an income protection policy is that it’ll act as a source of income in the event of you making a claim.

With an income protection policy you’re able to:

  • Maintain your standard of living as it can be used to pay your mortgage, loans, living expenses and bills
  • Insure up to a maximum of 70% of your gross monthly salary
  • Keep your savings for something else
  • Support your dependants if something happens to you
  • Access support services from insurers that you can use during the policy term to help with rehabilitation and medical support

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What are the different types of income protection insurance?

Accident, sickness, and unemployment cover (ASU) covers you for those 3 situations. If you’re unable to work because of a short or long-term illness, an accident, or redundancy or involuntary unemployment, this is the cover for you. Normally the policies last for 12 months but can vary.

Unemployment or redundancy aren’t currently being covered due to the coronavirus outbreak. Our useful guide on what income protection is will help answer any questions you have.

Payment protection insurance (PPI) is designed to cover a single debt such as a mortgage, loan or credit card. You can use this cover to continue making your repayments if you’re unable to work. PPI normally pays out for 12 – 18 months.

Mortgage payment protection insurance (MPPI) will continue to pay off your mortgage payments if you can’t work. These policies can make your mortgage payments for 6 months – 2 years, depending on the policy chosen.

It’s important to understand the differences to help you find the right policy to suit your needs.

Should I get short-term or long-term income protection?

This depends entirely on your personal situation and the policy you feel suits you and your needs.

Long-term income protection provides you with a regular income until you’re able to return to work or until the policy payment term ends. There’s usually a minimum 5-year term and can run until your state retirement age. There are some long-term insurance policies that are designed to pay for a maximum amount of time whilst a claim is running, for example up to 5 years. Some policies will allow you to claim more than once.

Looking for something longer-term again? A life insurance policy may be better suited to your circumstances.

Short-term income protection insurance policies generally pay out for a shorter period and are often written as 1- or 2-year policies. Accident, Sickness and Unemployment (ASU), Payment Protection Insurance (PPI) and Mortgage Payment Protection Insurance (MPPI) are all types you can choose for your policy. These are designed to provide set payments for a defined period, that may help continue to pay specific amounts such as outstanding loans.

We recommend checking your household expenses before deciding on which type of policy to go for.

What payment type is right for me when getting income protection cover?

There are 3 payment types that insurers offer. You’ll find these under the ‘premium types’ section on the result page:

Guaranteed premiums do not change during the term of the policy, unless you choose to make a change to the policy. As the premium cannot be changed by the insurer, you’ve got comfort in knowing the monthly cost stays fixed.

Reviewable premiums can be changed after a set period and are likely to increase at the insurer’s discretion in the long term.

Age-related premiums are based on your age and will go up each year as you get older during the term of your policy. Some insurers provide a schedule with the increases to the premiums shown throughout the term of the policy, but others don’t.

For all of these, it’s best to check the policy details so you can choose a payment type that suits how you want to pay, and to avoid any unpleasant surprises.

We compare many income protection insurance companies to save you money

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Need more help?

Will my policy cover unemployment?

There are some specialist policies that protect you against the loss of income if you lose your job through redundancy or involuntary unemployment. Unfortunately, these policies are currently unavailable due to the coronavirus outbreak. Our guide on what income protection is will help answer any questions you have.

Can you have income protection insurance and claim Universal Credit?

Yes, you can have Universal Credit and income protection insurance. However, there is an overlap as if you make a claim on your insurance policy and start receiving monthly payments, it lowers the amount of Universal Credit you’re entitled to. You can check on the Money Advice Service.

Can I start receiving income insurance payments as soon as I’m unable to work?

Yes, you can. When filling out the quote form you’ll see a question on ‘waiting time’ – this is the amount of time you must be unable to work before your monthly benefit will begin to be paid.

The longer you can wait before needing your payments the cheaper your policy could be.

How do I work out waiting time?

Things to think about when working out your wait time are:

  • If you can’t afford a day without pay
  • If you could live solely off statuary sick pay (SSP) for the 28 week period before starting your income protection payments
  • Whether you have any savings you would use for the first month or so
  • If your company has any other sick pay benefits as well as SSP

Is income protection insurance a taxable benefit?

Yes. If you’re paying the insurance premium yourself, then there’s no tax liability on any benefits you receive. If you have a mortgage or rent, or a commitment to household bills, then an income protection policy will pay you a guaranteed tax-free monthly amount to help you cover these expenses.

Why is it important to protect your income?

If you were to get sick and left unable to work, you would want something in place to help you and your family out. That’s where an income protection policy can help. By getting a policy that helps provide a regular income to cover your mortgage, household bills and other expenses, you can rest assured that you’re covered.

How much cover do I need?

This depends on whether you choose a short or long-term policy, how much income you have in the first place, and how much money you need to cover your bills, mortgage and other essential outgoings if you’re unable to work due to illness or accident. Consider these as a starting point in determining how much cover you’re likely to need. You can also choose to have the policy increase each year so that the chosen benefit keeps in line with inflation.

Insurers typically cover up to 70% of your salary before tax. Some insurers will restrict the amount you can receive to a maximum, so you have an incentive to rehabilitate and return to work, and so you do not profit from your illness or misfortune.

Make sure you find out what benefits you’re entitled to if you’re unable to work. Check the exact details of what your employer has to pay you and for how long. If you benefit from an Employers Group Income Protection Scheme, check how long you will be paid for.

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Confused.com income protection is provided by Direct Life & Pension Services Ltd, who are authorised and regulated by the Financial Conduct Authority. Registered office; 2nd Floor Gateway 2, Holgate Park Drive, York, United Kingdom, YO26 4GB. Registered in England and Wales No 2467691. Our service is free and compares a wide range of trusted household names. Confused.com is an intermediary and receives commission from Direct Life & Pension Services Ltd which is based on a percentage of the total annual premium if you decide to buy through our website. We pride ourselves on impartiality and independence – therefore we don't promote any one insurance provider over another.