Income Protection Insurance UK Guide 2026

What is income protection insurance?

Income protection (IP) is an insurance policy that pays you a regular income — typically 50–70% of your gross salary — if you're unable to work due to illness or injury. Unlike critical illness cover (which pays a one-off lump sum for specific conditions), income protection pays out for any condition that prevents you from working, and keeps paying until you return to work, retire, or die — whichever comes first.

It's arguably the most important protection product most working adults don't have.

Why do people underestimate the risk?

Statistics regularly cited by insurers:

• 1 in 7 workers will be unable to work for 3+ months at some point in their career
• The average long-term sickness absence lasts over 2 years
• State support (Statutory Sick Pay, then Employment and Support Allowance) replaces only a fraction of most people's income
• Most employees have only 3–6 months of sick pay from their employer

How income protection works

The deferred period

This is the waiting period before the policy starts paying out — typically 4, 8, 13, 26, or 52 weeks. The longer the deferred period, the lower the premium. Match the deferred period to how long your employer sick pay lasts, or how long your emergency fund would cover you.

Own occupation vs any occupation

Own occupation definition: you're paid if you can't do YOUR specific job. This is the best (and most appropriate) definition for most people.

Any occupation definition: you're only paid if you can't do ANY work at all. Much harder to claim — avoid if possible.

Payout amount

Typically capped at 50–70% of gross income — to maintain an incentive to return to work. Some policies are "indemnity" (payout based on income at claim time) and some are "agreed value" (agreed at policy outset). Agreed value gives more certainty but costs more.

How much does income protection cost?

Cost depends on age, occupation (some jobs carry higher risk of claim), health, deferred period, and benefit amount. As an indication:

• 30-year-old, office worker, £2,000/month benefit, 13-week deferred period: approximately £20–35/month
• 40-year-old, same criteria: approximately £35–55/month

Self-employed people especially need income protection — there's no employer sick pay safety net. It's often the single most impactful protection product for the self-employed.

Income protection vs critical illness cover

These products are often confused. Key differences:

• Income protection: Regular income, any condition stopping work, pays as long as you're off
• Critical illness: One-off lump sum, specific listed conditions only

For most people, income protection is the higher priority — but both have a place. A protection adviser can assess which covers the gaps in your specific situation.