Income protection insurance, explained
The short answer
Income protection insurance pays a regular monthly income, typically 50% to 65% of your earnings, if illness or injury stops you working. Payments start after a waiting (deferred) period you choose, often 4, 13 or 26 weeks or a year, and continue until you return to work, retire, die or the policy ends.
Income protection insurance replaces part of your income if illness or injury stops you working. MoneyHelper says it typically pays 50% to 65% of your income, as a regular monthly amount, until you can work again, retire, die or reach the end of the policy, whichever comes first. It covers most illnesses that leave you unable to work, and you can claim as many times as you need while the policy lasts.
Payments do not start the day you go off sick. You choose a waiting time, called the deferred period, and the policy pays only once you have been off for that long. How well a policy works for you depends mostly on three things: that deferred period, how the policy defines being unable to work, and how much it pays. This guide covers each.
How income protection works
You pay a monthly premium. If you become unable to work because of illness or injury, and stay unable to work through the deferred period, the insurer starts paying a monthly benefit. If you recover and go back to work, payments stop. If you become ill again later, you can claim again.
MoneyHelper points out that income protection is not the same as critical illness cover. Critical illness pays one lump sum for a listed diagnosis. Income protection pays a monthly income for any illness or injury that meets the policy's definition of incapacity, MoneyHelper notes that common reasons for time off, such as back problems and stress, are not covered by critical illness policies. See our guide to critical illness cover.
Long-term and short-term policies
The policies MoneyHelper describes as income protection are long-term: they can pay until retirement. There are also short-term income protection policies that pay for a fixed period, usually 12 or 24 months, and sometimes include cover for redundancy. Ordinary long-term income protection usually will not pay out if you lose your job.
Deferred periods
MoneyHelper says the most common deferred periods are 4, 13 and 26 weeks and a year, and the longer you wait, the lower the premium.
The Financial Ombudsman Service notes that people often line the deferred period up with how long their employer's sick pay lasts, so the policy starts if they are still unwell when work sick pay ends. If you change jobs, your sick pay may change too, so it is worth rechecking.
Own, suited or any occupation
The definition of incapacity decides whether a claim succeeds. MoneyHelper describes three main levels:
| Definition | Pays if you cannot... | Notes from MoneyHelper |
|---|---|---|
| Own occupation | do your own job | Usually the most expensive, most likely to lead to a successful claim |
| Suited occupation | do your own job or a similar one that suits your qualifications and experience | Sits in between |
| Any occupation | do any kind of work | Usually the lowest cost, higher risk of not paying out |
The Ombudsman adds a fourth it sees in policies: meeting the policy's own definition of "total disability". Read the whole incapacity clause, not just the first line, and check whether the definition changes at any point, for example at a certain age.
How much it pays
Benefit is usually set as a percentage of your earnings, and MoneyHelper's typical range is 50% to 65%. The policy will define what counts as earnings and over what period they are measured. The Ombudsman notes that insurers need evidence of your pre-disability earnings, and that it has seen people declare a higher income at the start in the hope of claiming that figure later. A claim is assessed against what you can prove you earned, so an overstated figure can mean paying for cover you cannot claim.
Policies may also reduce the monthly benefit by other income you receive while off sick. That is why the interaction with sick pay and benefits matters.
Statutory Sick Pay, employer sick pay and benefits
Employees who are too ill to work can get Statutory Sick Pay (SSP) from their employer. From 6 April 2026 the rules changed: SSP is now available to all eligible employees regardless of earnings, and is paid from the first full day of sickness absence, with no waiting days. GOV.UK sets the current figures:
- £123.25 a week, or 80% of your normal weekly earnings, whichever is lower
- paid for up to 28 weeks
- paid through payroll, with tax and National Insurance deducted
- you must be classed as an employee; self-employed people do not get SSP
Many employers pay more through a company (occupational) sick pay scheme, which will be in your contract. But MoneyHelper notes that employees are usually moved onto SSP within six months, and very few employers support staff for more than a year.
When SSP ends, you may be able to claim New Style Employment and Support Allowance (ESA) if you have paid enough National Insurance, usually in the last two to three years. You can apply up to three months before SSP ends. Current GOV.UK rates (2026/27) are:
| ESA stage | Weekly amount |
|---|---|
| Assessment rate, first 13 weeks, under 25 | up to £75.65 |
| Assessment rate, first 13 weeks, 25 or over | up to £95.55 |
| Work-related activity group | up to £95.55 |
| Support group | up to £145.90 |
Set those figures against your mortgage or rent and bills and you can see the gap income protection is designed to fill. Our guide to income protection for the self-employed covers what happens without any sick pay.
Is income protection taxed?
HMRC's guidance says benefits from a personal income protection policy are generally tax-free where you paid the premiums out of taxed income and got no tax relief on them. There is no limit on the amount you can receive tax-free.
Group income protection, arranged by an employer, works differently. Benefits are taxed as employment income, except for a just and reasonable part that reflects premiums you paid yourself.
What changes the cost
MoneyHelper lists the factors: your age, your job, whether you smoke or have smoked, the percentage of income you want covered, the deferred period, the range of illnesses and injuries covered, and your health, weight and family history. Premiums can be reviewable (the insurer can raise them over time) or fixed for the life of the policy.
How claims work and why they get refused
The ABI reports that insurers paid a record £209 million in individual income protection claims in 2025, with an average claim of £10,700. Mental health conditions accounted for 19% of claims, and the ABI reports 7,600 people returned to work.
The Financial Ombudsman Service says most income protection complaints it sees are about claims not being paid. Others are about claims stopped after a review, delays, advice at the point of sale, and how terms worked out in practice. Insurers can review your health during a claim, so payments can stop if they decide you no longer qualify. When the Ombudsman reviews a declined claim, it looks at the evidence of your disability and your ability to do your job under the policy's terms and definitions. Disputes over earnings and inaccurate answers on the application also come up. Our guide to declined claims explains your rights.
What to check in your policy
- Deferred period: how long, and whether it still matches your employer's sick pay.
- Definition of incapacity: own, suited or any occupation, and whether it changes during a claim or at a certain age.
- Benefit amount: the percentage of earnings, any monthly cap, and how earnings are defined and evidenced.
- Offset clause: whether payments are reduced by employer sick pay, state benefits or other income.
- Benefit payment period: to retirement age, or a limited period such as 12 or 24 months.
- Linked claims: whether a relapse after returning to work restarts the deferred period.
- Partial or rehabilitation benefit: what you get if you return part-time or on lower pay.
- Exclusions: general ones and any personal exclusions from underwriting.
- Premium type: fixed or reviewable, and whether benefit rises with inflation.
- Your occupation as recorded: whether it is accurate, and whether you must tell the insurer if it changes.
When to talk to a regulated adviser
MoneyHelper suggests getting advice from an independent financial adviser or specialist broker, noting that insurers use very different criteria and that specialist brokers can help if you have been declined before. It can make sense to talk to one if you have a health condition, an unusual job, irregular income, or an existing policy you are thinking of replacing. Do not cancel an existing policy until any replacement is in place, as MoneyHelper notes a cancelled policy cannot be reinstated and new cover may exclude conditions you now have. InsuredRight does not recommend products, but our free policy check can help you find the clauses above in your documents.
Not sure what yours says? Upload your income protection documents and we'll show you the cover, the exclusions and the conditions, with the wording behind each.
Check my policyCommon questions
How much of my salary does income protection pay?
MoneyHelper says income protection typically pays between 50% and 65% of your income. The exact limit, any monthly cap and how 'income' is measured are set out in your policy. HMRC guidance says benefits from a policy you pay for yourself are normally tax-free, so compare the benefit with your take-home pay rather than your gross salary.
What deferred period should income protection have?
The deferred period is how long you must be off work before payments start. MoneyHelper says the most common are 4, 13 and 26 weeks and a year, and the longer the wait, the lower the premium. The Financial Ombudsman Service notes many people match it to when their employer's sick pay ends, so the policy starts if they are still unwell then. A regulated adviser can help you weigh the options.
Is income protection taxable in the UK?
HMRC's guidance says benefits from a personal income protection policy are generally tax-free where you paid the premiums yourself and got no tax relief on them, with no upper limit. Group income protection paid for by an employer is different: benefits are taxed as employment income, except for any part that matches premiums you paid yourself.
Does income protection pay out alongside Statutory Sick Pay?
It can, depending on your policy. SSP is paid by your employer for up to 28 weeks at £123.25 a week or 80% of your average weekly earnings, whichever is lower. Many people choose a deferred period that ends around when sick pay stops. Check whether your policy reduces its payments by other income you receive while off sick, such as employer sick pay or state benefits.
What is the difference between own occupation and any occupation cover?
Own occupation pays if you cannot do your own job. Suited occupation pays only if you cannot do your own job or a similar one that suits your skills and experience. Any occupation pays only if you cannot do any work at all. MoneyHelper says own occupation is usually the most expensive but the most likely to lead to a successful claim, and any occupation usually the lowest cost but with a higher risk of not paying.
Can I claim income protection more than once?
Yes. MoneyHelper says a long-term income protection policy can be claimed as many times as you need while the policy lasts. That is a key difference from critical illness cover, which usually ends after one full claim. It is worth checking how your policy treats a relapse soon after you go back to work, and whether the deferred period has to be served again.
Sources
- MoneyHelper: What is income protection insurance? checked 2 Oct 2026
- MoneyHelper: Can you insure yourself against redundancy? checked 2 Oct 2026
- MoneyHelper: Personal insurance when you're self-employed checked 2 Oct 2026
- GOV.UK: Statutory Sick Pay (SSP) checked 2 Oct 2026
- GOV.UK: Sickness absences that start before and end on or after 6 April 2026 checked 2 Oct 2026
- GOV.UK: Employment and Support Allowance (ESA), what you'll get and eligibility checked 2 Oct 2026
- HMRC IPTM6110: sickness, disability and unemployment insurance, scope of the exemption (ITTOIA05/S735) checked 2 Oct 2026
- HMRC IPTM6120: employer's schemes (ITTOIA05/S743) checked 2 Oct 2026
- Financial Ombudsman Service: Income protection insurance checked 2 Oct 2026
- ABI: Protection insurers pay out £7.84 billion to help customers safeguard their finances (2025 figures, published June 2026) checked 2 Oct 2026
This guide is general information about how insurance works in the UK. It isn't advice and doesn't take your circumstances into account. Policies differ: your own policy documents are what count.