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 none of us can really know what the future holds for our health. Illness or injury could actually happen to any of us, any time. The most commonly claimed for illnesses on an income protection policy are mental health conditions, musculoskeletal injuries or conditions, and serious illnesses. Things that can happen to any of us (and have probably already happened to someone you know).
So the simple answer is: most of us need income protection – because most of us would face financial consequences if we lost our income for health reasons. Your personal circumstances will determine if you really need cover, and how much. 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.
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.
Read our guide to income protection for income protection for couples.
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.
Read our guide to income protection for parents.
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.
Read our guide to income protection for single parents.
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.
Read our guide to income protection for homeowners and how income protection can help protect your mortgage.
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.
Read our guide to income protection for renters.
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.
Read our guide to income protection for self-employed people.
Think you need income protection? Let's find the right policy for you, starting with your age:18-24
- 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