Income protection

What is income protection insurance and how does it work?

Income protection pays you a regular monthly benefit if illness or injury stops you working, replacing part of your lost earnings until you recover, retire or the policy ends. Payments start after a waiting period you choose, called the deferment period. Unlike critical illness cover, it isn't limited to a list of conditions and you can usually claim more than once.

  • Pays a monthly benefit, not a one-off lump sum
  • Covers a portion of your pre-tax income
  • A longer deferment period lowers the premium
  • The definition of incapacity decides whether a claim pays

Last reviewed October 2026

How income protection works

You choose a monthly benefit — usually a percentage of your gross income, up to the insurer's limit — and a deferment period. If you are signed off work for longer than that period because of illness or injury, the policy pays the benefit each month until you return to work, reach the end of the policy term or retire, depending on the terms.

Some policies pay for the full term of the claim; cheaper 'short-term' or limited-payment policies cap each claim at a set period, such as one or two years.

What affects the premium

  • Deferment period — choosing a longer waiting period (for example matching how long your employer would continue to pay you) reduces the premium.
  • Occupation — riskier jobs cost more, and some occupations may face restrictions.
  • Age, health and smoking status.
  • Benefit level and term — more cover for longer costs more.
  • Definition of incapacity — own-occupation cover costs more but is easier to claim on.
  • Guaranteed or reviewable premiums — reviewable premiums can rise during the policy.

Own occupation vs any occupation

The incapacity definition is one of the most important parts of the policy. 'Own occupation' pays if you can't do your specific job. 'Suited occupation' pays if you can't do your job or a similar one that fits your skills and experience. 'Any occupation' pays only if you can't do any work at all, which makes it much harder to claim on. Check the definition carefully before you buy.

Income protection vs critical illness cover

Critical illness cover pays a one-off lump sum on diagnosis of specific listed conditions. Income protection pays ongoing monthly benefits whenever you can't work for a medical reason covered by the policy — including many conditions, such as mental health problems and back injuries, that critical illness policies rarely cover. Some people have both.

Do you need it?

Start with what you'd already receive: your employer's sick pay, Statutory Sick Pay, any savings and other household income. Income protection is particularly important for the self-employed, who have no employer sick pay to fall back on.

MoneyHelper (moneyhelper.org.uk) offers free, impartial guidance on protection insurance, and a regulated protection broker or independent financial advice firm can help you compare policy definitions.

Income protection guides

Guide
What is income protection insurance?

How the cover works, what it costs, and the definitions that decide a claim.

Guide
Income protection vs critical illness cover

How the two differ, and which gaps each one fills.

Guide
How much income protection do I need?

Set the benefit and deferment period from your own outgoings and sick pay.

Common questions

What is income protection?

Income protection pays you a monthly benefit if you are unable to work due to illness or injury. It replaces a portion of your lost earnings until you recover, reach the end of the policy term, or retire.

How long does it pay out?

On a full-term policy, until you return to work, reach the end of the policy term or your chosen retirement age. Limited-payment policies cap each claim at a set period. You can usually claim more than once.

What is the deferment period?

The waiting period before payments begin — commonly 4, 8, 13, 26 or 52 weeks. Choosing a longer deferment period reduces your premium. Many people match it to how long their employer would continue to pay them.

Is it different to critical illness cover?

Yes. Critical illness pays a one-off lump sum on diagnosis of specific conditions. Income protection pays ongoing monthly benefits whenever you cannot work for a covered medical reason, for as long as the policy allows.

Does income protection cover mental health conditions?

Many policies cover mental health conditions such as stress, anxiety and depression if they prevent you from working, though some policies exclude or limit them, especially where there is a history. Check the policy wording.

What is 'own occupation' vs 'any occupation'?

'Own occupation' pays out if you cannot perform your specific job. 'Any occupation' only pays if you are unable to do any work at all, making it much harder to claim. Always check the policy definition carefully before buying.

Can I get income protection if I am self-employed?

Yes. Income protection is particularly important for the self-employed, as there is no employer sick pay to fall back on. Insurers typically base the benefit on your average earnings over recent years, evidenced by your tax returns.

Important: This page is general information, not financial advice or a personal recommendation. Product features and eligibility vary by provider — check the provider's own terms before you buy or apply.