What if I couldn't work?
Income Protection Explained: A UK Guide
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- Last reviewed
- Reading time
- 6 min read
This guide provides general information only. It is not financial advice or a personal recommendation and does not take account of your individual circumstances.
Quick answer
Income protection is an insurance policy that pays you a regular monthly income if illness or injury stops you working. It usually replaces part of your income, often around 50% to 65%, starts after a waiting period you choose (the deferred period), and can keep paying until you return to work, the policy ends or you reach the end of the payment period.
Key figures
- of income is a typical maximum benefit
- 50–65%
- common range of deferred periods
- 4–52 weeks
- weekly SSP rate in 2026/27 (or 80% of earnings if lower)
- £123.25
- maximum SSP period
- 28 weeks
What income protection is
Income protection is insurance for your earnings. If you can't work because of illness or injury, it pays a regular monthly amount to replace part of the income you've lost.
It is different from most other protection insurance because it pays a monthly income rather than a single lump sum, and it isn't limited to a list of specific illnesses. What matters is whether you are unable to work, as defined in the policy.
Most policies can be claimed on more than once while they are in force. If you recover, return to work and later become unable to work again, you can usually make a new claim.
How it works, step by step
A typical claim follows this sequence:
- You become unable to work because of illness or injury.
- Your employer's sick pay applies first, if you have any. That might be Statutory Sick Pay (SSP) only, or a more generous company sick pay scheme.
- The deferred period runs. This is the waiting time you chose when the policy started, for example 4, 13 or 26 weeks. Nothing is paid during it.
- Monthly payments start once the deferred period ends, as long as the insurer accepts the claim.
- Payments stop when you return to work, when the policy's payment period for that claim ends, or when the policy itself ends, whichever comes first.
Deferred periods
The deferred period is the gap between becoming unable to work and the first payment. Common options are 4, 8, 13, 26 and 52 weeks, although the choices vary between policies.
The general trade-off is simple: a longer deferred period usually means a lower premium, because you are covering more of the early absence yourself.
People often think about the deferred period alongside two things:
- Employer sick pay. If an employer pays full salary for a set time, some people line the deferred period up with when that pay reduces or stops.
- Savings. Money set aside can cover the gap before payments begin, and how long it would last is a practical question to ask.
How long it can pay
Policies generally fall into two groups.
Long-term (sometimes called full-term)
Payments can continue for as long as you remain unable to work, up to the end of the policy. Many policies are set up to end around an expected retirement age.
Short-term (sometimes called limited-payment)
Each claim pays for a maximum period, commonly one, two or five years. These are usually cheaper, but a long illness could outlast the payments.
How much it can pay
Insurers limit the monthly benefit to a proportion of your earnings, typically somewhere around 50% to 65% of gross income. The limit exists so that people are not better off financially when they are unable to work.
For a personal policy you pay for yourself, the monthly payments are generally free of income tax. Group income protection arranged by an employer works differently: payments are usually made through payroll and taxed like salary.
Some policies take other income into account when you claim, such as ongoing sick pay or some other benefits. The policy terms explain what is included.
How insurers decide you can't work
Every policy has a definition of incapacity. This is one of the most important parts of the terms, because it decides whether a claim is paid. The main types are:
- Own occupation: you can claim if you are unable to do your own job.
- Suited occupation: you can claim if you are unable to do your own job or any similar job suited to your skills, experience and training.
- Work tasks or activities: you can claim if you are unable to carry out a set number of everyday work-related tasks, such as lifting, walking or using your hands. This is the narrowest definition.
The same policy can offer different definitions depending on your occupation.
What usually affects the cost
Premiums are worked out individually. The main factors are:
- your age, health and whether you smoke
- your occupation, and how likely it is to lead to time off work
- the monthly amount you insure
- the deferred period
- whether it is long-term or short-term cover
- the definition of incapacity
- whether premiums are guaranteed (fixed for the life of the policy) or reviewable (the insurer can change them later)
- whether the cover is index-linked, so the benefit and premium rise over time to keep pace with inflation
Common exclusions and limitations
Policies differ, but some limits come up often:
- Pre-existing conditions may be excluded, or cover may be offered on different terms.
- Some causes of absence may be excluded, such as self-inflicted injury or certain hazardous activities.
- Unemployment isn't covered. Income protection pays when you can't work because of illness or injury, not if you lose your job.
- Accurate answers matter. When you apply, you answer questions about your health and lifestyle. If information is missing or incorrect, an insurer may reduce or decline a claim later.
Sick pay, SSP and state support
Many employees get some sick pay from their employer, but how much and for how long varies widely.
The legal minimum is Statutory Sick Pay. Since 6 April 2026, SSP is paid from the first day of sickness absence, and all eligible employees qualify regardless of earnings. It is paid at the lower of 80% of your average weekly earnings or the weekly rate, which is £123.25 for 2026/27, for up to 28 weeks. SSP is taxable.
After employer sick pay ends, state support such as New Style Employment and Support Allowance or Universal Credit may be available, depending on your circumstances. These are usually much lower than a working income.
Income protection can sit alongside all of these. The deferred period decides where it starts in that sequence.
Employed or self-employed
Self-employed people don't get SSP or company sick pay for their self-employed work, so an absence can mean income stops straight away. When applying, insurers usually ask for evidence of earnings, such as tax returns or accounts.
Company directors and contractors working through their own limited company often have questions about how earnings are counted, because income may be a mix of salary and dividends. Policies set out how they treat this.
A hypothetical example
Sam is employed and earns £48,000 a year. Sam's employer pays full salary for 13 weeks of sickness absence, then SSP. Sam has an income protection policy with a 13-week deferred period.
If Sam became unable to work for eight months:
- Weeks 1 to 13: Sam's employer pays full salary. The deferred period runs at the same time.
- From week 14: full company sick pay stops and SSP applies. The income protection payments begin, subject to the claim being accepted and any rules about other income.
- When Sam returns to work: the income protection payments stop.
If Sam's employer only paid SSP, the drop in income would have come much sooner, which is why the deferred period and sick pay are usually considered together.
Questions worth considering
- How much sick pay would I get from my employer, and for how long?
- How long could I cover my essential bills from savings?
- Which of my regular costs would continue if I couldn't work?
- Does my employer provide group income protection, and would it continue if I changed jobs?
- Which definition of incapacity applies to my occupation?
- Would I want premiums fixed for the life of the policy, or am I comfortable with them being reviewed?
Frequently asked questions
No. Income protection pays a regular monthly income if you can't work because of illness or injury. Critical illness cover usually pays a one-off lump sum if you are diagnosed with a specific serious illness listed in the policy.
Usually, yes. Most policies allow repeat claims while the policy is in force, although short-term policies limit how long each claim pays.
No. Income protection covers being unable to work because of illness or injury. It doesn't cover losing your job.
Payments from a personal policy you pay for yourself are generally free of income tax. Payments from group income protection arranged by an employer are usually taxed through payroll.
It is the waiting time between becoming unable to work and the first payment, chosen when the policy starts. Longer deferred periods usually mean lower premiums.