If you’ve decided you need to protect your income – well done. Most people don’t get round to sorting it out, even though it can be an important kind of cover to have in place. The tricky bit is working out what cover to buy.

When it comes to income protection, there are lots of variables in your own life to consider, but the products themselves can also be quite complex. A simple online calculator can be a good place to start, especially if you want a ballpark of how much it might cost you to get insured, but it’s not always the most accurate.

Getting some free advice from an expert is usually the best way to make sure you invest in the right cover for you. The income protection policy you buy needs to be suitable for your profile, needs and budget – and, of course, pay out when you need it to.


How much income protection do I need?

The first thing to know is that most insurers will cover up to a maximum of 50-60% of your pre-tax salary. This is usually enough to cover life’s essentials, but calculating what these are is the best place to start. Think about:

  • Rent or mortgage
  • Household bills
  • Food shopping
  • Travel costs
  • Childcare costs

If you lose your income, it might be that you need to cut back on some non-essential spending – takeaways, holidays, and so on – but most of us will have monthly expenses that we can’t cut back on (at least not without making significant, unwanted lifestyle changes). This is the part that income protection can help to cover in case you find yourself unfit to work.


What waiting period should I choose?

All income protection insurance policies come with a waiting period, or ‘deferred’ period. This is the amount of time you wait between becoming too unwell or unfit to work and starting to receive your monthly benefit payments.

Working out what waiting period to go for is another thing you’ll need to calculate. This’ll be based on how much sick pay you have and what alternative ways you have to support yourself financially without an income – and how long they’d last.

Another factor will be what effect the waiting period has on the premium. Shorter waiting periods tend to have higher premiums, as the policy would start paying out more quickly. Longer waiting periods have cheaper premiums, as you’ll have to wait longer to start receiving your benefit. It’s about balancing how quickly you’d need the policy to pay out with how much you can afford to pay in premiums.

Shorter waiting periods tend to have higher premiums, as the policy would start paying out more quickly. Longer waiting periods have cheaper premiums, as you’ll have to wait longer to start receiving your benefit.

How long do I need to be insured?

It depends what financial commitments and financial dependents you have. In most cases, our financial obligations are highest when we’re younger, then decrease with age. If you’re in your 20s, 30s or 40s and you have a home and/or a young family, you’ll probably have greater, more pressing financial responsibilities than you will have by the time you’re in your 50s or 60s. This is because when you’re older, you’re more likely have paid off debts, have less financially dependent children, and perhaps have accumulated savings.

That said, we all tend to base our outgoings on what we know is coming in each month, whatever age we are. If you can afford it, having income protection in place to protect you for as long as you’re of working age could be sensible. You could choose to be covered until retirement, or choose a policy term simply to cover the period of time when you’d be most financially vulnerable if you lost your income – e.g. 10, 20 or 30 years, depending how old you are when you take out the policy.


Should I use an income protection calculator?

An online calculator can be a useful way to get ballpark costs and start learning about the different insurance products out there – but as you can see, there are lots of variables to think about when buying income protection.

What’s more, your health and lifestyle will play a big part in determining how much it’ll cost you to be insured, and what kind of cover is most suitable for you. These aren’t usually factored in when using an online calculator, so it might not be the most accurate way of looking into it. To make sure everything’s factored in, we always recommend talking to an expert.


  • Lots of factors affect what income protection is right for you and how much it’ll cost you to be insured
  • An online calculator can give you ballpark costs, but these are likely to change once your health and lifestyle is factored in
  • To work out how much income protection you need, think about the essential costs you need to cover each month if you didn’t have an income
  • To work out what waiting period to choose, think about how quickly you’d need financial support if you lost you income – and what alternatives you can use in the meantime
  • To work out how long you need to be insured for, think about how losing your income would affect you now and long into the future
What is income protection?
An insurance policy that pays a monthly amount if you can't work for any medical reason. It's designed to replace part of your missing income, so you'll always be able to cover the essentials, even if lose your income because of an illness or injury.
What does income protection cover?
Income protection covers you if you're unable to work for medical reasons. This includes any illness or injury, physical or mental, that leads to you being signed off work by a medical professional.
What doesn't income protection cover?
Income protection won't cover you if you're not working for anything other than a medical reason – like redundancy. You won't be able to claim on your income protection unless you're signed off work by a medical professional.
How much does income protection cost?
The cost of cover is different per person because it depends on how much cover you buy, how quickly you'd need the policy to start paying out, and how much of a risk you are to insure (based on your age, health and lifestyle).
Will my income protection pay out?
Yes, if you meet what's known as your insurer's 'definition of incapacity' – in other words, you meet their criteria for being unable to work. This definition is based, among other things, on the job you do, and you can read it before buying the policy.

This post is intended for informative purposes only and does not constitute advice.