Income Protection (IP) is a type of cover which is misunderstood by many. Our experienced protection advisers have collated a number of questions regarding income protection that they hear on a regular basis to provide some clarity and even bust some income protection myths!
But first let us explain what income protection really is. In short, it is a type of insurance that pays a regular income if someone is unable to work due to illness or injury. Income protection is also able to provide cover if someone is unable to work due to mental health issues.
Now, let’s dive into those common questions/beliefs that our advisers often hear…
Q. I already have sick pay at work. Why would I need income protection alongside it?
A. Assuming sick pay and IP are the same is a common misconception. In simple terms, income protection is constant, whilst sick pay is temporary and varies depending on the company that someone works for. Company sick pay often has a cut-off at which point they have the option of going back to work or being put on unpaid leave. Income protection can be continuous until they get better and are truly able to come back to work. To put this into perspective, data published by one provider stated that the average length of an income protection claim during 2024 was 6 years and 9 months*.
Q. My job is dangerous and I’m at high risk of getting injured. Will any protection provider accept me?
A. For the self-employed and/or those who work in hazardous jobs, it’s important to explore the benefits of protecting income. Nowadays, protection providers are increasingly able to cover more high-risk jobs. Rates are dependent on the provider and whilst some providers might be more expensive for high-risk jobs, others might not even consider the occupation. Protection advisers will help find the best possible option to suit an individual’s needs.
Q. I am in the midst of my mortgage application. Should I wait for the process to complete to start my income protection cover?
A. There is no wrong time to protect income. IP isn’t tied to a mortgage, it is tied to someone’s income. For most people, an income is needed to pay their outgoings, including bills, rent/mortgage, day-to-day expenditure, etc. A mortgage doesn’t necessarily make someone’s income more important to protect, but income protection may provide greater peace of mind where regular mortgage payments result in an increase in monthly outgoings. Could the individual still afford these if they stopped working?
Q. I get paid the standard minimum wage so I’m not sure if I’ll be able to afford anything with the payout if something does happen to me. Is it even worth it?
A. Many people believe that their income needs to reach a certain level to qualify for income protection, some even think that their income is not worth covering. These are misconceptions – all incomes are worth covering. Whilst the pay-out amount for lower salaries might be less if someone is unable to work, it will undoubtedly be better than being left completely unpaid.
Q. I can’t get cover because I have pre-existing medical conditions.
A. Although pre-existing medical conditions may be excluded, the policy holder would still be covered for any other medical or mental health condition that prevented them from working, subject to the limitations of the policy taken out. Some providers understand that the exclusion of pre-existing medical conditions removes some of the policy value and so might offer a percentage discount to reduce the monthly cost of the policy whilst these exclusions remain in place. The exclusions can be reviewed in the future after some time has passed. Your adviser can seek guidance from the underwriters.
Q: Are there any reasons someone might choose not to take out Income Protection?
A. While Income Protection is generally recommended for most individuals, there are certain situations where it may not be the most suitable option. These include:
• Affordability: If the monthly premiums are too expensive and don’t fit within the individual’s budget.
• Policy exclusions: If a pre-existing illness or condition isn't covered, and the exclusion relates to the individual’s main concern about being unable to work in the future.
• State benefit eligibility: If the person is likely to receive more financial support from state benefits than from an Income Protection policy.
Understanding how income protection works and what it can offer is an important part of ensuring that you have the right protection in place to suit your individual circumstances.
Information correct at time of publishing (June 2025)
*Aviva Income Protection (08/2024)
Further information:
https://www.citizensadvice.org.uk/consumer/insurance/types-of-insurance/income-protection-insurance/
CD/DY/165/06.25
