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Income protection insurance

Compare income protection quotes to find a policy that could pay out if you find yourself unable to work. 

Due to the coronavirus (COVID-19) outbreak, ActiveQuote is not currently offering unemployment cover.

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What is income protection insurance?

Income protection insurance covers you if you can't work because of illness or injury. It’s a kind of salary protection insurance to make sure you get a regular income until you retire or can go back to work.

Income protection cover is different from critical illness cover. Critical illness cover pays out a lump sum if you develop a life-threatening illness.

To find the best income protection insurance policy, compare as many income protection quotes as you can. You’ll need to look for the best income protection insurance for your situation, not just the cheapest price. 

Here’s more about how income protection insurance works.

What types of income protection cover are there?

An income protection insurance policy can be either short-term or long-term.

Short-term income protection insurance can protect you in the event of illness, injury or involuntary redundancy. You won’t be covered for voluntary redundancy. With short-term income protection insurance, your regular payouts are normally limited to a set time period – often one or two years.

Some short-term policies pay out if you can’t do a certain element of your role; that’s called an ‘own occupation’ policy. There are also ‘suited tasks’ policies and these don’t pay out if your employer has alternative types of work to offer you.

With long-term income protection insurance, UK providers will usually cover you until you: return to work; retire; or until the income protection cover ends. These policies usually start at five years of cover. It’s a type of cover for more serious situations that mean you’re off work for a much longer period of time.

Different policies will cover you for different eventualities. For example:

  • Permanent health insurance will cover you for a percentage of your income if you have an accident or illness that leaves you unable to work. It’s a long-term insurance so it’ll cover you until retirement age.

  • Accident and sickness cover pays out until you can return to work, usually for one or two years.

  • Unemployment cover pays out a replacement income if you lose your job. Payments will be deferred so they won’t be instant. 

  • Accident, sickness and unemployment cover pays out if you suffer illness, an accident or job loss

There are other types of loss of income insurance available. These include guaranteed policies, reviewable policies and age-related policies:

  • Guaranteed policies have fixed monthly premiums. That means you know exactly what you have to pay each month for your income protection cover.

  • Reviewable policies let you change your level of income protection insurance after a set term.

  • Age-related policies are when the premiums increase as you get older. But your occupation or lifestyle has no effect on your premium

Make sure you buy the right income protection insurance policy for your needs. Going for the cheapest policy just because of the price might mean you don’t end up with the cover you need.

You could even have a combination of policies. But, the more policies you have, the more you’ll be paying in premiums.

Do you need an income protection insurance plan?

This depends on your situation. It’s a good idea to work out what your monthly expenses are, and think about how you’d cover them if you lost your income. If you couldn’t afford to pay your bills, it might be worth your while considering an income protection insurance policy.

It’s particularly important if you’re someone who has a family to support, or financial commitments that must be met. If something happens that leaves you out of work, you’ll find that your savings get used up very quickly. But, even if you don’t have a family, you may still find a way to pay your bills if you lost your income.

Salary protection insurance can be especially useful if you're self-employed or a freelancer. It’s also handy if you’re a contractor. Without an employer, you don’t get benefits such as sick pay. 

Having insurances like these can give you the reassurance and peace of mind that everything would be ok if the worst happened.

Of course you may decide you don’t need it. For example, you may not need it if:

  • You might have an excellent employee benefits package which means you’d continue receiving your income for a sufficient time

  • You’re close to retirement and you could retire early

  • Your family could support you

  • Government benefits would cover all your financial commitments

Here’s more information on how to decide if you need income protection cover.

How do you find the best income protection insurance?

The best type of income protection insurance UK providers can offer is the one that best suits your needs. The ideal policy for you will cover you for what you want, for the length of time you want, and offer the cheapest monthly premiums.

To find the cheapest policy, compare income protection insurance policies from as many insurers as possible. Getting lots of income protection quotes means you can choose the cheapest income protection quote that meets your needs.

If I have income protection insurance, will I be able to claim as soon as I’m off?

No. Most policies stipulate that you have to be off for a full 30 days before you can start claiming.

You’re usually not covered for the initial period of time that you’re off, known as your ‘excess period’. Your excess period is set at the time of taking out your policy. When you’re looking at this, don’t forget to consider what sickness benefits you get from your employer. Most people would want it to start paying out when their sick pay stops. 

With unemployment insurance, most policies won’t start paying out for 90 or 120 days. This is so that people don’t buy insurance when they already know they’re likely to be made redundant. 

You should think carefully about how long you could afford to be without an income before agreeing an excess period.

What information do I have to share to get income protection insurance?

When you apply for an income protection plan, make sure you share correct information about yourself. If you don’t, your income protection cover might not be valid and you won’t get a payout. For example, don’t say that you’ve never smoked if that’s not the case.

You might be asked to share:

  • Your name

  • Your age

  • Your address

  • Information about your job

  • Whether you’re employed or self-employed

  • Details about your lifestyle (such as whether you smoke)

  • Details about your current state of health

  • What type of insurance you want 

  • How much cover you want 

  • How long you want your excess period to be

How much does salary protection insurance cost?

An income protection plan can cost as little as £10 per month. Others cost more than £80 per month. It all depends on your situation and what kind of policy you choose.

It’s important to find the best income protection for your needs. But, while you must look for the best income protection policy for you, the cost will also affect your decision. 

Factors that affect the price of your policy include your age, your health the length of your policy and the level of maximum cover. For example, it’s likely that your premium will be higher the older you are. Similarly, your policy will cost more if it’s giving you cover for longer, or cover for a wider range of illnesses and eventualities.

Some policies cover for illness and injury, while others cover for unemployment too. You should bear these factors in mind when deciding which income protection insurance quote to choose.

Are there any alternatives to income protection insurance?

Yes, there are other types of insurances that could help you out of a tricky spot if you lost your income.

You could look into:

 Redundancy protection which protects your income if you’re made redundant.

Income protection insurance FAQs

Last updated: 14 October 2021

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