Income Protection Insurance
Replace your income if illness or injury prevents you from working — for as long as you need it.
Income protection is one of the most valuable and most underused protection products available. It pays a regular monthly income — typically 50–70% of your pre-illness earnings — if you are 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 illness or injury that stops you working, and continues to pay until you recover, reach retirement age, or the policy term ends. For anyone who relies on their income to meet day-to-day costs, it is an essential safety net.
What is Income Protection Insurance?
Income protection insurance — sometimes called Permanent Health Insurance (PHI) — pays a regular monthly benefit if you are unable to work due to illness or injury. The benefit is typically 50–70% of your pre-illness income, and it is paid tax-free directly to you. There is a deferred period — a waiting period before the policy begins to pay — which you choose when you take out the policy. Common deferred periods are 4, 8, 13, 26, or 52 weeks. A longer deferred period means lower premiums, so the right choice depends on how long your employer sick pay or savings would last. The definition of incapacity matters enormously. Own occupation cover — the gold standard — pays out if you cannot do your own specific job. Any occupation cover only pays out if you cannot do any job at all, which is a much higher bar. We always recommend own occupation cover where possible. Income protection can be arranged on a short-term basis (paying for up to one or two years per claim) or a long-term basis (paying until recovery or retirement). Long-term cover provides genuine financial security; short-term cover is more affordable.
Who is it suitable for?
Key Benefits
Real-World Examples
Self-employed consultant — back injury
A self-employed IT consultant suffers a serious back injury and cannot work for 14 months. With no employer and no sick pay, his income stops immediately. His income protection policy — with a four-week deferred period — begins paying 60% of his pre-illness income after the first month. His mortgage, bills, and living costs are covered throughout his recovery. He returns to work without a penny of debt.
Employee — employer sick pay runs out
An employee receives six months' full pay and then six months' half pay from her employer. She is diagnosed with a condition that keeps her off work for two years. Her income protection policy — with a 26-week deferred period — kicks in as her employer sick pay ends, ensuring she continues to receive an income throughout. The longer deferred period kept her premiums low.
Permanent incapacity — pays to retirement
A 46-year-old is diagnosed with a degenerative condition that prevents her from working permanently. Her long-term income protection policy pays out until her planned retirement age of 65 — providing 19 years of financial security. Without the policy, she would have been entirely dependent on state benefits.
Freelancer — mental health absence
A freelance designer takes an extended absence due to severe depression and anxiety. His income protection policy — arranged on an own occupation basis — pays out because he cannot perform his own specific job, even though he could theoretically do a different type of work. An any occupation policy would not have paid out in these circumstances.
Frequently Asked Questions
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Find out if your business protection is adequate, correctly structured, and as tax-efficient as it could be.
Why Choose JK Insurance Brokers?
- Whole-of-market access — all leading insurers
- FCA authorised & regulated (FRN 1047042)
- No broker fees — ever
- Business protection specialists
- Personal, one-to-one service with Tom Dobbe
- UK-wide advice by phone or video call
- Ongoing reviews as your business grows
Speak Directly to Tom
I help company directors and business owners protect their families, shareholders and businesses.
01737 333249[email protected]