Income protection insurance pays a proportion of your salary — typically 50–70% — if you're unable to work due to illness or injury. It's not the most exciting financial product, but for many people it fills a gap that becomes catastrophic if it's left open. The question is whether you're one of those people — and that depends almost entirely on what your employer already provides.
Start here: what does your employer actually pay?
Statutory Sick Pay is £116.75 a week. Most people don't realise that's all they'll get.
Statutory Sick Pay (SSP) is the legal minimum: £116.75 per week (2024/25) for up to 28 weeks. For someone earning £35,000/year — roughly £2,916/month — SSP replaces less than 15% of their income. The gap between your salary and SSP is your exposure.
Check your employment contract or staff handbook for your employer's sick pay policy. If it's generous (full pay for 12+ months), income protection becomes less urgent. If it's SSP-only from day one, the case for income protection is strong for anyone with a mortgage, dependants, or fixed financial commitments.
What the state provides
State benefits for long-term illness are very low. Don't build a plan around them.
| State support | Amount | Reality check |
|---|---|---|
| Statutory Sick Pay (SSP) | £116.75/week for up to 28 weeks | Only if employed; self-employed receive nothing |
| Employment & Support Allowance (ESA) / UC health element | ~£84–138/week depending on circumstances | Means-tested, subject to assessments, often delayed |
| Personal Independence Payment (PIP) | £28.70–£184.30/week | Based on care/mobility needs, not income replacement |
ESA (now often accessed via Universal Credit) is intended as a safety net, not an income replacement. Combined with SSP, the best-case state support for a typical earner is still far below most people's essential monthly outgoings — particularly if they have a mortgage.
How income protection works
The key variables: deferred period, definition, and benefit amount.
You choose how long to wait before the policy pays out: typically 4, 8, 13, 26, or 52 weeks. Longer deferred periods mean lower premiums. Match this to how long your employer sick pay lasts — if you get 3 months full pay, a 13-week deferred period makes sense.
"Own occupation" is the strongest definition: the policy pays if you can't do your own specific job. "Suited occupation" pays only if you can't do any job you're suited for by training or experience. "Any occupation" is the weakest — you'd need to be unable to do any work at all. Own occupation costs more but covers far more scenarios.
Policies typically replace 50–70% of gross income, paid tax-free. You can't insure 100% of income — there's a deliberate incentive to return to work. The payout continues until you return to work, the policy term ends, or you reach retirement age.
Short-term income protection (1–2 years maximum payout) is cheaper but leaves you exposed to long-term illness. Long-term income protection covers you until retirement age — more expensive but addresses the genuine catastrophic risk.
Who needs it
Your situation determines how urgent this is.
Self-employed, no employer sick pay whatsoever
Day one of illness means day one of zero income. No SSP, no employer sick pay, no fallback. An emergency fund covers short gaps; income protection covers the serious ones — a back injury, cancer diagnosis, mental health crisis lasting months or years.
Strong case — no other income protection exists for the self-employedEmployed with mortgage, employer pays 3 months full salary then SSP
After 3 months, income drops from £2,916/month to £506/month on SSP — while the mortgage, bills, and food continue. A 13-week deferred income protection policy kicks in exactly when the gap opens. This is the most common scenario where IP is clearly worth it.
Clear case — match the deferred period to your employer's sick pay termPublic sector employee with generous sick pay (full salary for 6 months, half salary for 6 months)
You have 12 months of meaningful cover from your employer. The case for income protection is weaker — though not absent. A 52-week deferred policy is cheap and covers the tail risk of very long-term illness.
Weaker case — generous employer sick pay reduces urgency significantlyRenting, no dependants, large emergency fund (12+ months of expenses)
Low fixed costs, no mortgage, savings buffer. Income protection is less urgent here — the emergency fund handles medium-term illness and you're not exposed to the mortgage catastrophe scenario. Still worth considering for long-term illness protection.
Lower priority — good foundation already; consider term length carefullyCritical illness cover pays a lump sum if you're diagnosed with specific conditions (cancer, stroke, heart attack). Life insurance pays on death. Income protection pays a regular income if you're too ill to work — regardless of diagnosis. They cover different risks and are not substitutes for each other. Most people with dependants and a mortgage benefit from thinking about all three, not assuming one covers the others.
Income protection premiums vary significantly by job type (manual workers pay more than office workers), age, smoking status, and pre-existing health conditions. Some conditions may be excluded or attract higher premiums. Applying while you're healthy and employed tends to give the best terms — the cover becomes harder and more expensive to obtain after a health event.
Do you actually need income protection — given your specific situation?
Franky asks about your employer sick pay, employment type, fixed costs, and savings — then gives you an honest assessment of your exposure and whether cover makes sense.
Talk to Franky →