Income protection
A monthly income if you cannot work due to illness or injury. The cover most people overlook, even though loss of income is the most likely thing to derail a mortgage.
Income protection replaces a portion of your salary, typically 50 to 70%, if illness or injury stops you working. It is the protection people skip first and need most. Statutory sick pay runs out at 28 weeks. Employer sick pay rarely lasts beyond six months, often less. After that the bills do not stop. We arrange short-term and long-term policies, advise on deferred periods to match your sick pay, and pre-assess any medical history before the application goes in.
Who this is for
- You have a mortgage and your household relies on your income to pay it.
- You are self-employed and have no employer sick pay or death-in-service to fall back on.
- Your employer sick pay runs out after one to six months and you have nothing on top.
- You have a previous condition that has been treated and resolved, but you assume cover would be impossible or too expensive.
What income protection actually pays
If you are unable to work because of illness or injury, the policy pays a regular monthly amount, tax-free, after a defined waiting period (the deferred period). Most policies pay until you return to work, retire, or the policy ends, whichever is first. There is no cap on the number of claims; the same person can claim, recover, return to work, and claim again on a different illness.
Own occupation, suited occupation, or any occupation
"Own occupation" means the policy pays if you cannot do your specific job. "Suited occupation" pays only if you cannot do a job aligned with your training and experience. "Any occupation" pays only if you cannot do any job at all. Own occupation is the standard we recommend; suited and any-occupation policies cost less but pay out in fewer situations, because the definition is harder to satisfy. A lower premium usually reflects a weaker claim definition, and the definition is what decides whether a claim is paid.
Deferred periods
The deferred period is how long you wait between stopping work and the income starting. Common options are 4 weeks, 8 weeks, 13 weeks, 26 weeks and 52 weeks. The longer the deferred period, the cheaper the premium. Match it to your employer sick pay or, for the self-employed, to how many months of savings you have. Most employed clients sit at 13 or 26 weeks; most self-employed sit at 4 or 8 weeks.
Long-term, short-term and budget options
A full long-term policy pays until retirement or recovery and is what most homeowners need. Short-term (or "budget") income protection pays for a maximum of 12, 24 or 60 months per claim and is materially cheaper. We model both. For families with no other safety net we usually recommend a long-term policy on at least one earner; the short-term route is a sensible compromise on the second earner or for tighter budgets.
How much can I cover?
Insurers cap cover at 50 to 70% of pre-tax income. The cap exists because the pay-out is tax-free; insuring 100% of gross income would let you earn more off work than on. For self-employed clients the same cap applies, calculated against three-year average net profit (or salary plus dividends for limited company directors).
Common pitfalls
Three big ones: choosing on premium alone and discovering the policy is "any occupation" only, setting a deferred period longer than your savings or sick pay can bridge, and failing to update the cover after a pay rise or career change. We avoid all three at outset and review at every life event.
How Major Money Matters helps
Specific things we do for this product. No generic platitudes.
Match the deferred period to your sick pay
We map your full sick-pay timeline (statutory, employer, savings) and set the deferred period so income starts the day other money runs out, not earlier, not later.
Own-occupation cover by default
Lower-priced income protection is often written on an "any occupation" definition, which pays out in far fewer situations. We use own-occupation policies, with insurers whose claims definitions hold up at the front line.
Pre-assess prior conditions
Mental health, back issues, fertility treatments and BMI all affect insurer appetite. We pick the insurer most likely to take you on cleanly rather than collect declines.
Review at every salary change
Cover that worked at £40k of household income does not work at £80k. We review on every remortgage and major career change.
Frequently asked questions
Will income protection pay out for stress, anxiety or depression?
Yes, if the underlying cause meets the policy definition of incapacity. Mental-health claims are now the largest category of income protection claims at most insurers. Disclosure of any prior treatment is essential.
How is "unable to work" defined?
The policy compares your symptoms against the duties of your occupation (own occupation policies). If you cannot perform the material duties of your job, the policy pays. We choose insurers whose definitions are written tightly and consistently applied.
Will state benefits affect my pay-out?
No. Income protection is private cover and is paid in full regardless of any state support. Some employer-provided cover does offset against benefits; private policies do not.
How much does income protection cost?
As an example only, a 35-year-old non-smoker in a low-risk job might pay in the region of £25 to £45 a month for £2,000 a month of cover with a 13-week deferred period. This is not a quotation. Manual occupations and shorter deferred periods cost more, and the premium you are offered depends on your own circumstances and medical underwriting.
Can I claim more than once?
Yes. Most policies pay on each new period of incapacity, with no cap on lifetime claims. If you recover, return to work and a separate condition arises later, the policy pays again.
Is it worth it if I am self-employed?
Especially if you are self-employed. There is no statutory or employer sick pay to fall back on, so income protection is usually the single most important policy in a self-employed protection package.
Related
Other protection products that often pair with this one.
Critical illness cover
A tax-free lump sum on diagnosis of a serious illness. Wording varies wildly between insurers; comparing price alone misses the point.
Read moreLife insurance
A lump sum on death, written in trust, sized to clear the mortgage. Often the least expensive way to cover a repayment mortgage.
Read moreFamily income benefit
A monthly tax-free income for the family if you die during the term. Cheaper than level-term life cover; easier to budget around.
Read moreWhat our clients say
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Get income protection that actually pays out
A short call to map your sick pay, deferred period and the right cover level. We will obtain quotations from insurers available through our panel and put forward the policy we would buy ourselves.
We aim to return your call as quickly as we can. Mon to Fri 9am to 5pm, weekend appointments on request.