Income protection is an insurance policy that covers you in case you lose your income for any medical reason. It’s a valuable kind of cover to have in place if you want peace of mind that you’ll always have money coming in, even if you can’t work.

It’s important to have this kind of cover in place if you’d be financially affected by losing your income. Most of us would face financial struggles in this scenario, because most of have financial commitments and/or dependents – and we tend to base our spending on what we know is coming in each month. If one or the only household income is suddenly missing, it can have big consequences on the household finances.

But what’s also important is being able to afford your monthly insurance premiums. Buying cover is about balancing what you need with what you can afford and are happy to pay in monthly premiums. Several factors affect the price of income protection, which will always be different per person.

What affects the cost of income protection?

The price of income protection is based on a combination of the cover you buy and several other factors relating to you – including your age, health and lifestyle. There are many variables to choose from when buying income protection cover, all of which can affect the cost – including:

  • How much cover you buy (e.g. what your monthly payments would be if you claimed)
  • How long you’re insured for (i.e. the policy term)
  • How long your waiting period is (i.e. how long you wait between losing your income and starting to receive insurance payments)
  • Whether your cover is full-term or short-term (i.e. the maximum amount of time it’d pay out for per claim)

And because income protection is a health-related insurance product, you yourself play a big part in how much it’ll cost to be insured. Insurers will want to know how much of a risk you are to insure before working out how much you should pay for cover. In particular, they’ll need to know about your age, health and lifestyle – so they’ll ask questions around your:

  • Personal health history
  • Family health history
  • Height and weight (BMI)
  • Smoking status
  • Lifestyle (e.g. hobbies)
  • Occupation

The answers you provide will tell them how much of a risk you are – or, in other words: how likely you are to make a claim on your income protection policy. They might charge more to insure someone who has an existing health condition or a higher-risk occupation (e.g. a construction job) than someone who doesn’t have any health conditions and has a lower-risk occupation (e.g. an office job).

Typical income protection policy prices

Based on smoking status

The following prices are based on:

  • 30-year-old male or female office worker
  • £1,500 level income protection cover until retirement (38 years)
  • 13 week waiting period
  • Own occupation incapacity basis
Insurer/product Non-smoker Smoker Anorak review
Aegon
Personal Income Protection
£34.72 £45.01 Read our Aegon income protection review
AIG
YourLife Plan Income Protection
£34.02 £54.03 Read our AIG income protection review
Aviva
Income Protection+
£26.65 £35.17 Read our Aviva income protection review
Legal & General
Income Protection
£24.39 £32.76 Read our Legal & General income protection review
LV=
Income Protection
£27.64 £35.90 Read our LV= income protection review
Royal London
Personal Menu Plan
£25.75 £36.05 Read our Royal London income protection review
VitalityLife
Income Protection
£29.89 £43.76 Read our VitalityLife income protection review

Quoted on 14/04/21

Based on age

The following prices are based on:

  • Healthy, non-smoking male or female office worker
  • £1,500 level income protection cover until retirement
  • 13 week waiting period
  • Own occupation incapacity basis
Insurer/product 25 year old (43 years' cover) 35 year old (33 years' cover) 45 year old (23 years' cover) Anorak review
Aegon
Personal Protection
£30.51 £39.91 £47.96 Read our Aegon income protection review
AIG
YourLife Plan Income Protection
£30.25 £43.27 £61.31 Read our AIG income protection review
Aviva
Income Protection +
£22.97 £32.48 £51.61 Read our Aviva income protection review
Legal & General
Income Protection Benefit
£21.62 £27.60 £50.54 Read our Legal & General income protection review
LV=
Income Protection
£22.38 £33.72 £51.67 Read our LV= income protection review
Royal London
Personal Menu Plan
£21.35 £33.03 £58.32 Read our Royal London income protection review
VitalityLife
Income Protection
£25.01 £36.21 £66.15 Read our VitalityLife income protection review

Quoted on 14/04/21

What waiting period should I choose?

All income protection policies come with a waiting period, which is the amount of time you wait between losing your income and your income protection payments kicking in. Typical insurer waiting periods are: 1, 4, 8, 13, 26 or 52 weeks. Shorter waiting periods have higher premiums and longer waiting periods have lower premiums.

It can be tempting to choose a longer waiting period in order to get cheaper premiums – but you need to be sure you’d be able to cope financially in the time that you wait. People tend to tide themselves over with sick pay, savings, or financial help from someone else. Equally, if you choose a shorter waiting period because you’d need the insurance payments to kick in quickly, you need to be sure the monthly premiums will be affordable for you over the life of your policy.

Should I buy short-term or full-term cover?

This is another big factor when it comes to the price of your policy. The difference between the two types of cover is in the maximum amount of time they’ll pay out for per claim:

  • Short-term cover pays out for a maximum benefit period per claim – usually 1, 2 or 5 years, depending what you choose when you buy the policy
  • Full-term cover doesn’t have a maximum benefit period – it keeps paying out until you’re well enough to go back to work, or you retire/your policy ends (whichever happens first)

Both kinds of cover allow you to make multiple claims while you’re insured, even if it’s for the same illness or condition – though for short-term cover, some insurers require a minimum amount of time to have passed between claims.

The main thing to bear in mind with short-term cover is that it stops paying after the maximum benefit period even if you still can’t work – so you could be left without an income if you’re ill for longer than your payment period. For this reason, it’s cheaper than full-term cover, but can still be a very valuable (and often adequate) kind of cover to have in place if you experience periods of ill health or injury throughout your life. Both can provide a financial lifeline when you need it most, but if you can afford it, full-term cover provides the ultimate peace of mind.

  • Income protection covers you if you lose your income for any medical reasons
  • The price of income protection will be different per person because it depends on the cover you buy and how much of a risk you are to insure
  • Your age, health and lifestyle all contribute to the cost of income protection
  • Having a health condition or a risky hobby or occupation can make it more expensive to get covered
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?
An income protection policy covers you if you're unable to work and lose your income 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 or resignation. 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.