top of page

What is Income Protection Insurance?

Income Protection Through your Choice Cover

Income Protection Insurance is a type of insurance that provides financial support in the event of the policyholder being unable to work due to illness or injury. It is designed to replace a portion of the policyholder's income, ensuring they can meet their financial obligations and maintain their standard of living during a period of incapacity.

How Does Income Protection Insurance Work?

Income Protection Insurance works by paying out a regular income to the policyholder if they are unable to work due to an illness or injury that is covered by the policy. The policyholder will typically receive a percentage of their pre-tax income, which is usually tax-free.

The policy will have a waiting period, also known as a deferred period, which is the time between the policyholder becoming unable to work and the payments starting. This waiting period can range from a few weeks to several months, depending on the policy.

Once the waiting period has passed, the policyholder will start receiving regular payments, known as the benefit period. The benefit period can vary depending on the policy, but it is typically a number of years or until the policyholder reaches retirement age.

Why is Income Protection Insurance Important?

Income Protection Insurance is important because it provides a safety net for individuals and families in the event of an unexpected illness or injury. It ensures that even if they are unable to work, they can still meet their financial commitments and maintain their standard of living.

Without Income Protection Insurance, individuals may be forced to rely on savings or government benefits, which may not be sufficient to cover their expenses. This can lead to financial stress and hardship, impacting not only the policyholder but also their dependents.

Who Needs Income Protection Insurance?

Income Protection Insurance is suitable for anyone who relies on their income to cover their living expenses. It is particularly important for individuals who do not have substantial savings or other forms of financial support in the event of incapacity.

Some individuals may have access to sick pay or other forms of employer-provided support, but these benefits are often temporary and may not be sufficient to cover long-term incapacity. Income Protection Insurance provides a more comprehensive and long-term solution for income replacement.

Saving money through income protection

What Does Income Protection Insurance Cover?

Income Protection Insurance covers a wide range of illnesses and injuries that prevent the policyholder from working. The exact coverage will depend on the specific policy, but it typically includes:

  1. Illness: Income Protection Insurance covers both short-term and long-term illnesses that result in incapacity. This can range from common illnesses such as flu or pneumonia to more serious conditions like cancer or heart disease.

  2. Injury: Income Protection Insurance also covers injuries that prevent the policyholder from working. This can include accidents, sports injuries, or any other type of injury that results in incapacity.

  3. Mental Health: Many Income Protection Insurance policies now include coverage for mental health conditions such as depression, anxiety, or stress-related illnesses. This recognizes the importance of mental health and the impact it can have on a person's ability to work.

It's important to note that Income Protection Insurance does not cover pre-existing conditions. These are conditions that the policyholder had prior to taking out the policy. However, some policies may offer limited coverage for pre-existing conditions after a certain waiting period.

How Much Does Income Protection Insurance Cost?

The cost of Income Protection Insurance will vary depending on a range of factors, including the policyholder's age, occupation, health, and the level of coverage they require. Generally, the younger and healthier the policyholder, the lower the premiums will be.

The cost of Income Protection Insurance is typically expressed as a monthly premium, which can range from a few pounds to several hundred pounds. It's important to shop around and compare quotes from different insurance providers to ensure you're getting the best value for money.

How to Choose the Right Income Protection Insurance Policy?

When choosing an Income Protection Insurance policy, there are several factors to consider to ensure you're selecting the right coverage for your needs:

  1. Coverage: Consider the illnesses and injuries that are covered by the policy. Ensure that the policy provides comprehensive coverage for a wide range of conditions.

  2. Waiting Period: Determine the waiting period that suits your financial circumstances. A shorter waiting period will result in higher premiums but quicker access to benefits.

  3. Benefit Period: Consider the length of the benefit period. Ideally, the benefit period should cover you until you reach retirement age or until you're confident you can return to work.

  4. Policy Exclusions: Review the policy's exclusions to ensure you understand what is not covered. Pay attention to any pre-existing condition exclusions and seek clarification if needed.

  5. Premiums: Compare premiums from different providers to ensure you're getting the best value for money. Consider any additional benefits or features included in the policy that may justify higher premiums.

  6. Insurance Provider: Research the reputation and financial stability of the insurance provider. Look for reviews and ratings to ensure they have a track record of reliable claims handling.

Is Income Protection Insurance Worth It?

Whether Income Protection Insurance is worth it depends on your individual circumstances and financial goals. However, for many individuals, the peace of mind and financial security it provides outweigh the cost of premiums.

Income Protection Insurance can provide a lifeline in the event of incapacity, ensuring that you can meet your financial commitments and maintain your standard of living. It can help you avoid relying on savings or government benefits, which may be insufficient to cover your expenses.

Before making a decision, it's important to consider your personal circumstances, including your financial obligations, dependents, and any existing sources of financial support. It may also be helpful to consult with a financial advisor who can provide tailored advice based on your specific needs.

How to Buy Income Protection Insurance?

To buy Income Protection Insurance, you can follow these steps:

  1. Research: Conduct thorough research to understand the different types of policies available, the coverage they offer, and the premiums involved. Consider seeking advice from a financial advisor to help you navigate the options.

  2. Compare Quotes: Obtain quotes from multiple insurance providers to compare coverage and premiums. Online comparison tools can help simplify this process.

  3. Application: Once you've chosen a policy, complete the application form provided by the insurance provider. Provide accurate and honest information about your health, occupation, and lifestyle.

  4. Medical Examination: Depending on your age and health, the insurance provider may require a medical examination or request additional medical information. This is to assess your risk profile and determine the appropriate premiums.

  5. Underwriting Process: The insurance provider will review your application and medical information to determine whether to offer you coverage and at what premiums. They may request further information or clarification if needed.

  6. Policy Issuance: If your application is approved, you will receive a policy document outlining the terms and conditions of your coverage. Carefully review the document to ensure it accurately reflects your understanding and expectations.

  7. Premium Payment: Pay the premiums according to the agreed schedule. Ensure you understand the payment methods and any grace periods or penalties for late payments.

  8. Policy Review: Regularly review your policy to ensure it still meets your needs. Life circumstances can change, so it's important to update your coverage if necessary.


Income Protection Insurance provides essential financial protection in the event of incapacity due to illness or injury. It ensures that you can continue to meet your financial obligations and maintain your standard of living during difficult times. By understanding the coverage options, comparing quotes, and choosing the right policy, you can secure your financial future and gain peace of mind. Remember to regularly review your policy and consult with a financial advisor to ensure your coverage remains appropriate for your needs.

Disclaimer: This blog is intended for informational purposes only and does not constitute financial or legal advice. Please consult with a qualified professional before making any financial decisions.


Your Choice Cover Logo

12 Celtic Trade Park, Bruce Road Fforestfach, Swansea, SA5 4EP

Phone: 0333 188 7617

15 views0 comments


bottom of page