Is Income Protection Worth It? A Simple Guide for UK Workers

Published: 20 June 2025

When it comes to protecting your income, many people ask the same question: is Income Protection worth it? If you’re self-employed, don’t receive sick pay from your employer, or rely solely on Statutory Sick Pay (SSP), the answer could be yes.

Let’s take a look at how Income Protection works, who it’s for, and whether it’s a smart investment for you and your family.

What is Income Protection?

Income Protection Insurance is designed to pay you a regular monthly income if you’re unable to work due to illness or injury. It usually pays between 60% and 70% of your gross salary after a deferred period, which you choose at the start of your policy. This can range from 1 week to 12 months.

Once the deferred period is over, the policy will start paying out monthly until you return to work or reach the end of the policy term. This financial support can help cover essential costs such as mortgage payments, rent, utility bills, and groceries, giving you peace of mind while you focus on recovery.

Advantages of Income Protection

There are several reasons why Income Protection is a popular choice for UK workers:

Provides a guaranteed monthly income when you are too ill to work
Includes options tailored for public sector workers
Pays out upon receipt of a valid sick note from your GP
You can make multiple claims throughout the life of the policy
Choose between short-term cover (1, 2, or 5 years) or full-term cover up to retirement

Disadvantages of Income Protection

Like any financial product, there are some things to keep in mind:

Existing medical conditions are often excluded from cover
Premiums can increase significantly if you have health concerns
The cost of cover rises with age as the risk of illness increases
Certain job types are classified as higher risk, which can affect eligibility or pricing

Despite these factors, Income Protection can still be a lifesaver if your income is vital to keeping your household running.

How Necessary is Income Protection?

If your finances would be at risk if you were off work due to illness, then Income Protection is more of a necessity than a luxury. SSP currently provides just £116.75 per week, which for most people is not enough to cover basic household expenses.

For example, if you were unable to work for six months, an Income Protection policy could be the difference between keeping your home and falling behind on mortgage or rent payments. This is especially important if you are the main or sole earner in your household.

Income Protection vs Critical Illness Cover

These two products offer different types of protection, and one should not be seen as a replacement for the other.

Critical Illness Cover pays out a lump sum if you are diagnosed with a serious illness that is listed in the policy.
Income Protection provides ongoing monthly payments if you are unable to work due to illness or injury.
Serious Illness Cover allows multiple claims and pays based on the severity of your condition.

For full protection, many people choose to take out both types of cover.

Short-Term Options: Accident and Sickness Benefit

If you do not qualify for long-term Income Protection or prefer something simpler, Accident and Sickness Benefit might be right for you. This is a non-medically underwritten policy that provides monthly payments of £720, £1,500 or £2,500 for up to three months per claim.

You can make up to five claims in five years, making this a good alternative for those who want short-term financial support without the complexity of traditional income protection.

Family Income Benefit (FIB)

Family Income Benefit is another option to consider. Instead of paying a lump sum on death or terminal illness, FIB pays a tax-free monthly income to your family for the remainder of the policy term.

It is a cost-effective way to provide ongoing financial support for your loved ones, particularly if you have young children. One drawback is that the payout decreases over time, as the policy only pays for the remaining years in the term.

Conclusion: Is Income Protection Worth It?

If losing your income due to illness would put your financial stability at risk, Income Protection is absolutely worth considering. It offers security and peace of mind when you need it most, ensuring that your bills are paid and your lifestyle is protected.