Is income protection insurance worth it UK?

For most working adults, yes — especially if you'd struggle financially after a few months unable to work. Statutory Sick Pay is only £116.75/week and lasts 28 weeks. Income protection pays up to 60-70% of your salary until you recover, reach retirement, or your policy ends. It's particularly important if you're self-employed (no SSP at all) or have dependants.

How much does income protection cost UK?

Typically £20-£60 per month for a 30-40 year old covering £1,500-£2,000/month. Cost depends on your age, health, occupation, smoking status, and the deferral period chosen. A longer deferral period (e.g., 6 months vs 4 weeks) significantly reduces premiums. Premiums can be fixed (guaranteed) or reviewable (cheaper initially but can increase).

What's the difference between income protection and critical illness cover?

Income protection pays a monthly income if you can't work due to ANY illness or injury. It pays until you recover. Critical illness cover pays a one-off lump sum if you're diagnosed with a specific listed condition (cancer, heart attack, stroke, etc.). Income protection is broader and more flexible; critical illness is simpler but limited to named conditions.

Do I need income protection if I have savings?

If you have 6+ months of expenses saved, you may not need immediate cover — but what if you're off work for years? Long-term illness or injury can last much longer than savings. Income protection fills this gap. You can reduce costs by choosing a longer deferral period (e.g., 6 months) so insurance kicks in after your savings would run out.

Insurance Guides UK — Compare, Save, and Protect What Matters

Should I Get Income Protection Insurance? — Who Needs It and Why

Is income protection insurance worth it? Who needs it, what it covers, how much it costs, and how to decide if you need protection against being unable to work.

By PocketWise · 8 April 2026 · 3 min read

Insurance information is general guidance only. Insurance products are regulated by the FCA. Policy terms vary between providers — always read the policy document before purchasing.

Income protection insurance pays you a regular income if you can’t work due to illness or injury. Here’s how to decide if you need it.

What Income Protection Covers

Feature	Detail
What it pays	Monthly income (typically 50-70% of salary)
Trigger	You can’t work due to illness or injury
Duration	Until you recover, retire, or policy ends
Tax status	Payments are tax-free (if you pay premiums personally)
Conditions covered	Any illness or injury that stops you working
Exclusions	Usually pre-existing conditions (varies by policy)

Why You Might Need It

Statutory Sick Pay Is Minimal

Support	Amount	Duration
Statutory Sick Pay (SSP)	£116.75/week	Up to 28 weeks
Employment and Support Allowance	£90.50-£138.20/week	After SSP ends (assessed)
Universal Credit	Varies	Means-tested
Income protection	50-70% of salary	Until recovery/retirement

On a £35,000 salary (£2,333/month net), SSP would give you just £467/month — a 80% pay cut.

Self-Employed Get Nothing

Self-employed people have no employer sick pay and no SSP. If you can’t work, your income drops to zero immediately unless you have insurance.

Who Needs Income Protection Most

Priority	Situation
Essential	Self-employed with no sick pay
Essential	Single income household with dependants
Essential	Mortgage or rent with no other payer
High	Main earner in a couple
High	Limited savings (under 3 months expenses)
Medium	Dual income with good savings
Lower	Extensive savings or passive income
Lower	Employer offers generous long-term sick pay

Who Might Not Need It

Situation	Why you might skip it
Large emergency fund (12+ months)	Self-insured through savings
Partner’s income covers all bills	No financial gap if you’re off work
Employer long-term sick pay	Already protected (check duration)
Near retirement	Limited benefit period remaining
No dependants, low outgoings	Minimal financial impact

Types of Income Protection

Type	How it works	Best for
Long-term income protection	Pays until recovery or retirement	Comprehensive cover
Short-term income protection	Pays for 1-2 years	Budget option
Accident, Sickness & Unemployment (ASU)	Covers job loss too	Broader but shorter-term
Mortgage payment protection	Covers mortgage only	Homeowners wanting basic cover

Key Choices When Buying

Deferral Period (Waiting Period)

The time between becoming unable to work and your first payment:

Deferral period	Effect on premium	Best for
4 weeks	Most expensive	No sick pay or savings
8 weeks	Moderate	Limited sick pay
13 weeks	Cheaper	Medium employer sick pay
26 weeks	Cheapest	Good sick pay or savings

Strategy: Set the deferral to match your employer’s sick pay or savings buffer. If your employer pays full sick pay for 3 months, choose a 13-week deferral.

Benefit Amount

Coverage level	Monthly benefit (£35,000 salary)	Typical premium
50% of salary	~£1,167/month	Lower
60% of salary	~£1,400/month	Medium
70% of salary (max typical)	~£1,633/month	Higher

Most people choose 50-60%. Remember the payments are tax-free, so they go further than your gross salary suggests.

Premium Type

Type	How it works
Guaranteed premiums	Price fixed for life — more expensive initially
Reviewable premiums	Cheaper initially but insurer can increase
Age-banded	Increases at set intervals regardless

Guaranteed premiums cost more upfront but give certainty.

Typical Monthly Costs

Age	Non-smoker, office worker	Manual worker	Self-employed
25	£15-£25	£25-£45	£20-£35
30	£20-£35	£30-£55	£25-£45
35	£25-£45	£40-£70	£30-£55
40	£35-£60	£55-£95	£45-£75
45	£50-£85	£75-£130	£60-£100

Based on £1,500/month benefit, 8-week deferral, to age 67.

Income Protection vs Critical Illness vs Life Insurance

Feature	Income Protection	Critical Illness	Life Insurance
Pays for	Can’t work (any illness)	Specific named illness	Death
Payment type	Monthly income	Lump sum	Lump sum
Duration	Until recovery	One-off	One-off
Conditions	Any qualifying illness	Listed conditions only	Death (or terminal diagnosis)
Cost	Medium	Higher	Lower
Most useful for	Ongoing bills	Major financial shock	Dependants/mortgage

Decision Checklist

What happens if you can’t work for 6 months? → If you’d be in serious trouble, you need cover
Does your employer offer long-term sick pay? → Check duration and amount
How much savings could cover? → Set deferral period to match
Are you self-employed? → Strongly consider income protection
Do you have dependants? → Higher priority for cover

Life Insurance Guide — protecting dependants
Critical Illness Cover Guide — lump sum protection
Statutory Sick Pay Guide — what your employer must pay
Emergency Fund Guide — building your safety net

Sources

ABI — Income protection