Income protection is an insurance policy designed to protect you if you lose your income for health reasons. It provides peace of mind that you’ll always have a monthly income, even if you can’t work. Most people don’t have this kind of protection in place, because we have a tendency to think a long-term illness or injury won’t happen to us.

But of course, none of us can really know what the future holds for our health. And the fact is: illness or injury can happen to any of us, at any time. The most commonly claimed for illnesses on an income protection policy are mental health conditions, musculoskeletal injuries or conditions, and serious illnesses. In other words, things like stress, back pain, or cancer. Again, things that can happen to any of us (and have probably already happened to someone you know).

The simple answer to the question Who needs income protection, therefore, is: most of us. Because most of us have financial commitments or dependents (or both) – so most of us would face financial consequences if we lost our income for health reasons. This includes:

Generally speaking, your household circumstances and working status determine whether or not you need cover (and how much). And whether or not you decide to take out income protection depends on what you can afford and how much risk you’re happy to live with. Like any insurance, you might only discover that income protection is ‘worth it’ if the worst happens: you end up needing it.

Income protection if you’re in a couple

If you’re one half of a couple, it’s likely you’ll have some shared financial commitments, or that you’ll depend on each other financially in some way. This is the case if you’re married, civilly partnered, or cohabiting. If you lost your income for health reasons, it could affect both of you financially – especially if you couldn’t work for a long time. Having income protection in place is a way of protecting your shared finances if an illness or injury stopped you from working.

Income protection if you’re a parent

Naturally, children are financially reliant on their parents – and bringing up children can be expensive. If you lost your income for health reasons, would your family still be able to pay for everything you’d need to? Most families budget according to the money they have coming in – so if one income was suddenly missing, it could lead to financial struggles. Income protection is way of making sure that you and your family could continue to cope financially even if you were too ill to work.

Income protection if you’re a single parent

If you’re a single parent, you might be the main or only breadwinner in your household – making your income essential in terms of providing for your children. This arguably make it even more important to have a plan in place in case you lose your income through illness or injury, whether it's mental or physical. Income protection is a way of ensuring you’ll always have an income, so you know you’ll always have the money you need to cover the essentials for you and your children.

Income protection if you’re a homeowner

A mortgage is the biggest debt most of us ever take on in our lifetime. Having a plan in place in case something happens to you is a no-brainer. Income protection is a great way of achieving this for a mortgage, as it pays out a monthly amount if you can’t work for medical reasons. This money can be used to keep up with your monthly mortgage repayments and cover any other essentials, giving you financial peace of mind while you get better.

Income protection if you’re a renter

Renters need protection too – especially if you’ve got a partner or children. Your rent is usually your biggest monthly outgoing. If you lost your income for health reasons, would you and your family be able to keep up with the monthly rent? If not, income protection is a way of making sure you’ll always have the money you need to keep paying the rent, plus any other essentials.

Income protection if you’re self-employed

Being self-employed means you won’t have any sick pay in place through work – so a long-term injury or illness can have even bigger, even more immediate financial consequences on you than on someone who does. This is why it can be even more important to get your own plan in place if you’re self-employed, especially if other people’s way of life also depends on your income – like a partner or children. In the absence of sick pay, income protection can provide a financial safety net. It also means you don't have to go back to work before you're fully better.

  • Income protection is an insurance policy that pays out a monthly amount if you can’t work for any medical reason
  • Most of us need some level of income protection – because most of us would be financially affected if we lost our income because of an illness or injury
  • Income protection is a way of making sure you always have the money you need to cover your essential expenses, even if you can’t work

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