Introduction: Income Protection Insurance

Your income is the backbone of your financial security — it pays for your mortgage, bills, groceries, and lifestyle. But what would happen if illness or injury prevented you from working for months or even years? Income Protection Insurance is designed to safeguard your earnings, providing a regular, tax-free monthly payment if you’re unable to work due to sickness or injury.

In the UK, this type of insurance is particularly important for employees, self-employed individuals, and freelancers who may not have sufficient employer sick pay or savings to cover unexpected gaps in income. By understanding how income protection works, the types of cover available, and which providers offer the best policies, you can ensure financial stability and peace of mind for you and your family.

What Is Income Protection Insurance?

Income Protection Insurance is a type of insurance that provides you with a regular income if you are unable to work due to illness, injury, or disability. Unlike life insurance, which pays out a lump sum after death, income protection helps you cover your everyday living expenses—like rent, mortgage, bills, and groceries—while you recover and cannot earn your usual salary.

Key points:

1. Typically pays 50–70% of your normal income.
2. Covers you until you return to work or until the policy ends, depending on the plan.
3. Usually includes a waiting period (e.g., 4 weeks or 3 months) before payments begin.

Income protection is especially important for freelancers, self-employed workers, or anyone whose income depends on their ability to work, giving financial security during unexpected health challenges.

How Does Income Protection Insurance Work?

Income protection insurance works by providing you with a replacement income if you are unable to work due to illness, injury, or disability.

Here’s the step-by-step process:

1. Choose Your Cover
2. Select a policy that suits your income, profession, and lifestyle.
3. Decide on the percentage of income you want covered (usually 50–70%).
4. Set a waiting period (the time you must be off work before payments start, e.g., 4 weeks or 3 months).
5. Choose the benefit period (how long you want payments to continue—short-term or until retirement).

1. Pay Your Premiums
2. You pay regular premiums (monthly or annually) to keep your policy active.
3. Premiums depend on your age, occupation, health, and coverage level.

1. Claiming Benefits
2. If you become unable to work due to illness or injury, you submit a claim to your insurer.
3. The insurer may require medical evidence or proof from your doctor.
4. Once approved, you receive regular payments according to your policy terms.

1. Return to Work
2. Payments continue until you can return to work, until the benefit period ends, or until retirement age (depending on your policy).

Types of Income Protection Insurance

Income Protection Insurance can be tailored to different needs, depending on how long you want coverage and the way your policy defines your ability to work. The main types include:

1. Short-Term Income Protection

1. Provides cover for a limited period, typically 1–2 years.
2. Ideal for temporary illnesses or short-term injuries.
3. Pays a portion of your income during the claim period.

2. Long-Term Income Protection

1. Provides cover until you can return to work or sometimes until retirement age.
2. Suitable for serious or long-lasting illnesses and injuries.
3. Often chosen by self-employed workers or professionals who rely heavily on their income.

3. Own-Occupation vs Any-Occupation Policies

Own-Occupation

1. Pays out if you cannot perform your specific job.
2. Common for specialists, professionals, or skilled workers.

Any-Occupation

1. Pays out only if you are unable to work in any job suited to your skills, education, and experience.
2. Usually cheaper but more restrictive than own-occupation coverage.

4. Flexible Policies

1. Some insurers allow customization of waiting periods, payout percentages, and benefit limits.
2. Can include additional features like rehabilitation support or partial payouts for reduced working hours.

How Different Types of Income Protection Insurance Compare

Key Takeaways

1. Short-term vs long-term: Short-term is cheaper but limited, long-term covers serious or long-lasting conditions.
2. Own-occupation vs any-occupation: Own-occupation pays if you can’t do your specific job, while any-occupation only pays if you can’t do any suitable job.
3. Flexible policies: Allow customization of waiting periods, payout percentages, and benefit limits, often including rehab support.

Benefits of Income Protection Insurance

Income Protection Insurance offers several important advantages for anyone who relies on their earnings:

1. Financial Security

Income protection insurance provides a regular income if you cannot work due to illness, injury, or disability. It helps cover essential expenses such as rent or mortgage, bills, and groceries, ensuring your financial obligations are met even when you’re unable to earn.

2. Peace of Mind

This insurance reduces stress by knowing you’ll still receive money during periods of illness or incapacity. It allows you to focus on your recovery without worrying about finances.

3. Protects Your Lifestyle

Income protection helps maintain your standard of living even if you are unable to earn your regular salary. It also prevents financial strain on your family or dependents during difficult times.

4. Customisable Coverage

Policies can be tailored with options like waiting periods, payout percentages, and benefit periods. Some plans also include additional support such as rehabilitation services or partial work coverage.

5. Complementary Protection

Income protection works alongside other personal insurance, like critical illness or health insurance, for comprehensive coverage. It is especially important for freelancers, self-employed individuals, or high-income earners who do not have employer-provided sick pay.

6. Long-Term Security

Long-term policies can provide cover until retirement age, safeguarding your income over extended periods and ensuring financial stability well into the future.

Top UK Income Protection Providers

Aviva Income Protection Insurance (UK)

Aviva offers income protection insurance designed to help replace part of your earnings if you’re unable to work due to illness or injury. Their individual income protection product is often called Living Costs Protection, and it aims to give you financial support so you can cover bills, mortgage payments, food, and other essential expenses when you can’t work.

Key Features

1. Monthly income: Receive a fixed monthly payment to replace some of your income while you’re unable to work.

1. Deferred (waiting) period: You can choose how long you wait before payments begin, from 4 to 26 weeks.

1. Policy duration: Policies can last from 5 years up to age 71, depending on your choice.

Scottish Widows – Income Protection Insurance (UK)

Scottish Widows offers flexible Income Protection Insurance designed to provide a monthly income if you can’t work due to sickness or injury. Their policies are part of a broader protection product range that can be tailored to individual needs, with benefits and features included as standard to support financial stability when you’re unable to work.

Key Features of Scottish Widows Income Protection

1. Monthly income payments: Pays a regular income if you’re unable to work because of illness or injury, helping you cover living costs.

1. Flexible policy options: Includes both short‑term cover (up to 2 years) and full‑term cover (no maximum monthly payments until policy end).

1. Built‑in additional benefits: Such as rehabilitation income benefit, proportionate income benefit, fracture cover, and hospitalisation cover without extra cost.

Legal & General – Income Protection Insurance (UK)

Legal & General is a well‑known UK insurer offering Income Protection Insurance designed to provide you with a regular monthly income if you’re unable to work due to illness or injury. This type of cover helps protect your finances — such as mortgage payments, bills, and everyday costs — when you can’t earn as normal.

Key Features

1. Regular Monthly Payments: You receive tax‑free monthly benefits if you’re unable to work because of sickness or injury.

1. Flexible Waiting Periods: Choose how long you wait before payments start (e.g., 4, 8, 13, 26 or 52 weeks).

1. Benefit Until Retirement Age: Cover can continue until your chosen retirement age (often up to age 70), giving long‑term financial peace of mind.

Zurich Income Protection Insurance (UK)

Zurich is a major global insurer offering comprehensive Income Protection Insurance designed to support you if you’re unable to work due to illness or injury. If you lose income because you can’t work, Zurich can pay you regular monthly benefits to help cover essential expenses like bills, mortgage, rent, and everyday costs.

Key Features

1. Monthly Benefit Payments: Zurich pays a regular monthly income once your chosen waiting period ends.

1. Deferred/Waiting Period Options: You can usually choose how long you wait before payments start (for example 4, 8, 13, 26 or even 52 weeks).

AIG Income Protection Insurance (UK)

1. AIG Life Limited (part of the global American International Group) has been a well‑known provider of income protection insurance in the UK, offering flexible and feature‑rich cover to help protect your income if you’re unable to work due to illness or injury. Although AIG Life’s protection business is now part of Aviva Protection UK, many of the existing AIG income protection products and services remain available to policyholders.

Key Features & Benefits

Flexible Cover Options

1. You can choose between short‑term or long‑term income protection depending on how long you want payments to continue.

Waiting Period Choices

1. Policies include a deferred period before payments start (e.g., 4, 8, 13, 26 or 52 weeks).

Additional Support Features

1. Some policies include benefits like waiver of premium if you become unemployed, guaranteed insurability to increase cover after major life events, and sabbatical break cover.

LV (Liverpool Victoria) Income Protection Insurance (UK)

1. LV= (Liverpool Victoria) is one of the UK’s long‑established mutual insurers, offering Income Protection Insurance that helps replace part of your income if you can’t work due to illness or injury. LV= has a strong reputation in protection insurance and paid millions in income protection claims to thousands of customers in recent years, demonstrating its commitment to support policyholders when needed.

LV Income Protection Covers

LV’s Income Protection policies are designed to provide a regular monthly income if you’re unable to work because of sickness or an accident.

Key things included:

1. Regular monthly benefit: Pays you up to 60% of your income before tax if you can’t work.

1. Own occupation definition: The policy pays out if you can’t do your own job (not just any job).

1. Rehabilitation support: Helps with getting you back to health and work sooner.

Vitality Income Protection Insurance (UK)

Vitality offers a comprehensive Income Protection Insurance policy designed to support you if illness or injury stops you from working. It pays you a tax‑free monthly income to help cover essential living costs like mortgage payments, bills, and general expenses while you recover.

Key Features of Vitality Income Protection

1. Monthly payouts: Pays a tax‑free monthly benefit if you’re unable to work due to sickness or injury, helping maintain your financial stability.

1. Guaranteed benefits: Vitality automatically guarantees benefit amounts up to £1,500 per month, and with verified earnings, up to £8,000 per month for eligible customers.

1. Income Booster: If you engage with Vitality’s health programme, you could receive up to 20% extra on your monthly payout for the first six months of a claim based on your Vitality status.

The Exeter (Exeter Friendly Society) – Income Protection Insurance (UK)

1. The Exeter (formerly Exeter Friendly Society) is a UK‑based mutual insurer that specialises in protection products including Income Protection Insurance, health insurance, and life insurance. As a mutual friendly society, it’s owned by its members (policyholders) rather than shareholders, meaning profits are reinvested to benefit members.

Key Features

1. Monthly income benefit: Pays a monthly income if you’re unable to work due to health reasons.

1. Own‑occupation definition: Pays out if you can’t do your specific job, not just any job, which can make claims easier for many occupations.

1. Flexible options: You can choose different waiting periods, benefit levels, and claim periods to suit your budget and needs.

Shepherds Friendly – Income Protection Insurance (UK)

Shepherds Friendly is a UK mutual insurer offering Income Protection Insurance that helps replace part of your income if you can’t work due to illness or injury. Their plans are designed to provide regular monthly benefits tailored to your needs, helping protect your lifestyle and financial stability when you’re unable to earn.

Key Features of Shepherds Friendly Income Protection

1. Monthly Benefit Payments: If you’re unable to work due to illness or injury, the policy can pay up to 70% of your gross income — tax‑free — as a monthly benefit.

1. Flexible Waiting Periods: You can choose how long you wait before benefits start, helping align payout timing with employer sick pay or personal needs.

1. Cover Duration Options: You can select plans that pay benefits for one or two years, or choose long‑term cover that continues until retirement age.

Top Tips for Choosing an Income Protection Insurance Provider

Choosing the right income protection provider can make a big difference in how well your policy supports you during illness or injury. Here are essential tips to help you make an informed choice:

1. Compare Monthly Benefit Amounts

Different insurers will pay different percentages of your income if you claim — often between 50% and 70% of your wage. Look at:

Maximum monthly payout limits

Whether benefits increase with inflation

How monthly benefit amounts are calculated

Higher benefit limits can offer better financial security, especially for high earners.

2. Check Waiting (Deferred) Period Options

The waiting period is the time before your benefits begin after you can’t work. Common options are 4, 8, 13, 26, or 52 weeks.

1. Shorter waiting period: You start receiving money sooner — good if you have limited sick pay.
2. Longer waiting period: Lower premiums, but more out‑of‑pocket cost initially.

3. Look at Benefit Duration

Income protection can pay out for:

Short‑term (e.g., 1–2 years)

Long‑term (up to retirement age)

Long‑term cover offers greater peace of mind but usually has higher premiums.

4. Own‑Occupation vs Any‑Occupation Cover

Own‑occupation: Pays if you can’t do your specific job.

Any‑occupation: Pays only if you can’t work in any suitable job.

Own‑occupation is often better for skilled professionals or specialist workers.

5. Understand Policy Definitions

Terms like “unable to work,” “partial work,” or “return‑to‑work support” can vary between providers.

Make sure you understand:

What “unable to work” means for claims

Whether part‑time payouts are allowed

What evidence you must provide to claim

6. Review Additional Benefits

Some providers include extra features such as:

Rehabilitation support (e.g., physiotherapy, counselling)

Back‑to‑work payments if you return part‑time

Private GP access or health coaching

Guaranteed or minimum benefit amounts

7. Check Claims History and Payout Record

A strong claims payout record shows a provider’s reliability. Look for:

High claims approval rates

Transparent process

Positive customer reviews

8. Consider Your Occupation and Income Type

If you are:

Self‑employed

Freelancer

Contractor

9. Seek Professional Advice

Income protection is complex, and small differences can impact payouts. A financial adviser or broker can help you compare quotes and find the best policy for your situation.

10. Compare Quotes Online

Use comparison tools or brokers (like Hive Insurance Services) to see multiple options at once. Comparing providers side‑by‑side can save money and help you find better terms and benefits.

Quick Checklist Before You Buy

Monthly benefit amount suited to your income

Waiting period that matches your financial buffer

Long‑term payout period

Own‑occupation cover if needed

Extra benefits (rehab support, back‑to‑work options)

Conclusion: Protect Your Income and Secure Your Future

Income Protection Insurance is more than just a safety net — it’s a vital financial tool that ensures you can maintain your lifestyle and meet essential expenses if illness or injury prevents you from working. By providing a regular, tax-free monthly income, it protects you, your family, and your long-term financial stability from unexpected disruptions.

Choosing the right policy involves understanding waiting periods, benefit amounts, coverage duration, and whether own-occupation or any-occupation cover best suits your needs. With a wide range of UK providers like Aviva, Legal & General, LV=, Vitality, Zurich, The Exeter, Shepherds Friendly, and AIG, comparing policies carefully can help you find the most reliable and cost-effective solution.

Ultimately, investing in income protection is an investment in peace of mind — ensuring that even during difficult times, your finances remain secure and you can focus on recovery without added stress.