Income Protection

How would you pay the bills if you couldn't work for months?

Income protection pays you a monthly income if illness or injury stops you working, after a waiting period you choose.

Your ability to earn is often your most valuable asset. Income protection is designed to replace part of your income until you can return to work, your benefit period ends or the policy ends.

Free initial conversation, with no obligation. You deal with Des directly.

At a glance

What it pays

A monthly income, usually up to a proportion of your earnings set by the insurer

When it starts

After a waiting period you choose, commonly from four weeks to a year

How long

Until you return to work, the benefit period ends or the policy ends

Tax

Benefit from a personal policy is normally free of income tax under current rules

Authorised and regulated by the Financial Conduct Authority. FCA No. 1034779

Sick pay rarely lasts as long as recovery

Employers' sick pay often runs out after a few weeks or months. Statutory sick pay is a fraction of most salaries, and self-employed people may have nothing at all.

Income protection is designed for the longer absences: the back injury, the operation, the mental health condition that keeps you off work for months rather than days.

Protecting your income protects everything that depends on it.

Personal income protection

  • You own the policy and pay the premiums
  • The benefit is paid to you
  • Normally free of income tax under current rules

Executive income protection

  • Owned and paid for by your company
  • The benefit is paid to the company, which pays you through payroll
  • For directors and employees of limited companies

What can happen if nothing is in place

A long absence from work can affect every part of household finances.

  • Bills keep comingMortgage or rent, utilities and everyday costs continue.
  • Savings run downEmergency savings can disappear within months.
  • Pressure to return earlyFinancial worry can push people back to work before they're ready.
  • Debts build upMissed payments can affect your credit and your options later.
  • A partner under strainYour partner may need to earn more or care for you.
  • Plans put on holdHolidays, home improvements or pension contributions may stop.

How income protection works

The choices you make set how soon the benefit starts, how long it lasts and what it costs.

  1. Check what you'd get already

    We look at your employer's sick pay, any group income protection and your savings, so cover fills the real gap.

  2. Choose the waiting period

    Benefit starts once the waiting period has passed. Matching it to when your sick pay ends helps keep the cost down.

  3. Choose the benefit period

    Payments can be limited, for example to two years per claim, or continue until the policy ends. Longer cover usually costs more.

  4. Understand the definition

    The insurer assesses a claim against the policy's definition of incapacity, often based on your own occupation. This is one of the most important parts of the policy.

  5. If you claim

    If the claim is accepted, the insurer pays a monthly benefit after the waiting period. Many policies also offer support to help you return to work.

Who income protection is suitable for

It's worth considering if you rely on your earnings to pay the bills.

  • Employees whose sick pay is limited
  • Self-employed people with no sick pay
  • Homeowners and renters with regular commitments
  • Families who rely on your income
  • People with limited savings to fall back on
  • Company directors (who may also consider executive income protection)

When it may not be the right answer

Income protection doesn't pay a lump sum, and it won't pay out if you're not working when you claim or if your condition doesn't meet the policy's definition. If your employer already provides long-term income protection, you may need less cover. Company directors may find executive income protection, paid for by their company, more suitable.

Practical examples

These examples are illustrative only. The people are fictional, not clients, and any outcome would depend on underwriting, the policy terms and a valid claim.

  • Illustrative example · Employee

    Sick pay that runs out

    An office manager's employer pays full salary for three months, then statutory sick pay.

    The option: a 13-week waiting period, so benefit would start as company sick pay ends.

    The result: if a claim were accepted, a monthly income could help cover the mortgage and bills during a long recovery.

  • Illustrative example · Self-employed

    No sick pay at all

    A self-employed plumber has no sick pay and modest savings.

    The option: a shorter waiting period and a benefit period chosen to fit the budget.

    The result: if a claim were accepted, income could continue while he recovers from an injury.

  • Illustrative example · Company director

    Personal or executive cover?

    A director pays herself a salary and dividends through her limited company.

    The question: personal income protection, or executive income protection paid for by the company.

    The approach: I'd compare both, including how each insurer treats dividends, before recommending either.

Common questions

How much cover can I have?

Insurers usually limit the benefit to a proportion of your earnings, so you're not better off claiming than working. The exact limit, and how earnings are defined, varies between insurers.

How is income protection different from critical illness cover?

Income protection pays a monthly income if any illness or injury stops you working, after a waiting period. Critical illness cover pays a lump sum on diagnosis of a specified illness. Many people have both.

Can I claim more than once?

Usually, yes. Most policies allow repeated claims during the term, subject to the policy terms and any benefit period limits.

Is the benefit taxed?

Benefit from a personally owned income protection policy is normally free of income tax under current rules.

I'm self-employed. Can I get cover?

Yes. Insurers usually base cover on your taxable earnings, and you'll need to show evidence of income if you claim.

I'm a company director. Which should I choose?

You can have personal income protection, or executive income protection paid for by your company. The tax treatment and how dividends are treated differ, so it's worth comparing both. Read about executive income protection.

What affects the cost?

Your age, health, occupation, whether you smoke, the waiting period, the benefit period and the amount of cover.

Income protection has no cash value and pays out only on a valid claim, subject to the policy's definition of incapacity, waiting period and benefit period. Cover is subject to underwriting and accurate disclosure. Tax treatment depends on individual circumstances and may change.

Talk it through with me

Every family's situation is different. A conversation is the quickest way to work out which cover, if any, makes sense for you, and what it would cost.

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