Think about what would happen if you couldn’t work. Not for a week or two, but for months or even longer. Could you keep up with the mortgage? Pay the bills? Maintain the life you’ve built?

For most people, the honest answer is that it wouldn’t take long before things became difficult. Yet income protection insurance – one of the most practical forms of financial cover available – remains one of the most overlooked.

What Is Income Protection?

Income protection is an insurance policy that pays you a regular income if you’re unable to work due to illness or injury. Unlike some other types of cover, it isn’t a one-off lump sum – it pays out on an ongoing basis, usually a percentage of your normal earnings, for as long as you can’t work or until the policy ends.

Most policies cover between 50 and 70 per cent of your gross income. That might not sound like everything, but combined with any savings or other support, it can make a significant difference to your financial stability during a difficult time.

Who Needs It?

Income protection is particularly important for people who are self-employed. Without an employer to provide sick pay, your income can stop almost immediately if you’re unable to work. Even a few months without earnings can have a serious impact.

Employed people shouldn’t assume they’re covered, either. Statutory Sick Pay is currently £116.75 per week and lasts for a maximum of 28 weeks. Unless your employer offers a generous sick pay scheme, that may not be enough to cover your regular outgoings for long.

What Does It Cover?

Income protection covers illness and injury that prevent you from working. The exact definition of ‘unable to work’ varies between insurers and policies, so this is an important thing to look at carefully:

• Own occupation – pays out if you’re unable to do your specific job. The most comprehensive definition, and the one most advisers recommend where possible.
• Suited occupation – pays out if you’re unable to do a job suited to your skills, experience, and training.
• Any occupation – only pays out if you’re unable to do any work at all. The most restrictive definition, and less suitable for most people.

Most standard conditions – back problems, mental health issues, heart conditions, cancer – are covered, subject to underwriting. Pre-existing conditions may be excluded, though this varies.

The Deferred Period

Income protection policies have a deferred period – the length of time you must be off work before the policy starts paying out. Common options are four weeks, eight weeks, 13 weeks, 26 weeks, or 52 weeks.

Choosing a longer deferred period reduces the cost of the policy. If your employer pays sick pay for three months, for example, it may make sense to choose a 13-week deferred period and let the policy kick in when your employer cover ends. A good adviser will help you align the deferred period with your other provisions.

How Much Does It Cost?

The cost depends on your age, health, occupation, income, how much cover you need, and the length of the deferred period you choose. It’s generally more affordable than people expect, particularly if you take it out when you’re younger and in good health.

Some policies are reviewable (meaning the insurer can change the premium over time) while others are guaranteed (meaning the premium is fixed from the start). The difference matters, and it’s worth understanding which type you’re being offered.

Is It the Same as Critical Illness Cover?

No, and this is a common source of confusion. Critical illness cover pays a one-off lump sum if you’re diagnosed with a specific serious condition listed in the policy. Income protection pays a regular income for as long as you’re unable to work, regardless of the specific condition.

Both can have a role to play, but they do different jobs. Income protection is often described as the more practical day-to-day protection, because it replaces your ongoing income rather than providing a single payment that has to be managed carefully.

What About State Support?

It’s true that some state benefits are available if you can’t work, including Universal Credit and Employment and Support Allowance. But these are means-tested, subject to change, and rarely come close to replacing your actual earnings. Relying on them as your primary financial safety net is a significant risk.

Taking the Next Step

Income protection isn’t the most exciting thing to think about, but it’s one of the most sensible. The people who need it most are often the ones who haven’t yet considered it.

At Riviera Mortgages, protection advice is a core part of what we do. Whether you’re self-employed, recently taken on a mortgage, or simply realised you don’t have anything in place, we’re happy to talk through your options and help you find a policy that fits your life and your budget. Get in touch any time.