Home > Life Insurance > Income Protection

Income Protection

By: J.A.J Aaronson - Updated: 5 Dec 2015 | comments*Discuss
Income Protection Insurance Policy Self

It is a sad fact of life that accidents do happen. Considerable numbers of people are prevented from working for significant periods of time every year as a result of accidental injury or illness and this can cause great financial hardship.


Income Protection has been designed with the intention of relieving some of this hardship in the event that such a misfortune should befall you as the policy-holder. Many employers now offer financial provision for extended illness, but this is certainly not universal. Income Protection is, perhaps, of the greatest use to self-employed people; those who do not have an employer will not have access to any of these benefits and, as such, must make their own provisions.

Income Protection policies vary greatly between companies. You should bear in mind, however, that the vast majority will not cover your entire regular income. Rather, most will offer to replace around 60% of what you would have been earning, up to a maximum annual amount. This is generally around £120,000. As such, Income Protection is intended to cover your living expenses and ensure that you can get by. Similarly, taking out a plan helps to grant peace of mind to those who do not already have such provisions in place.

Debt Protection

Income Protection is also offered on such things as credit cards and personal loans. This may also be a good idea, again particularly if you are self-employed. The premiums are generally very low – sometimes as little as 50 pence in every £100 will be enough to safeguard your ability to pay back your debts were you to be prevented from working.

Even if you do not take out general Income Protection insurance, safeguarding your ability to pay back your debts is highly recommended; deeper financial problems often begin as a result of missed payments, which then lead to penalty charges and mounting debts. Income Protection for your loans and credit cards can help ensure that you avoid this situation.

It should be remembered that Income Protection is, on its own, not sufficient protection if you have any dependants. As a result, many of those who take out Income Protection do so as part of a package of insurance products. Primarily, you should look at either a traditional life insurance policy which will pay out a lump sum to your surviving dependants on your death, or an arrangement such as Family Income Benefit. Rather than paying a lump sum, these policies guarantee to pay a monthly income to your family between the time of your death and the expiry of the policy.

Finally, and perhaps most importantly, you should always ensure that your surviving relatives will have the ability to pay off any outstanding debts were you to die unexpectedly. This is particularly important if you are the main earner in your household. In order to achieve this, you should look at policies such as Mortgage Protection plans, which are designed to pay back large debts, and are described in more detail elsewhere on this site.

You might also like...
Share Your Story, Join the Discussion or Seek Advice..
My daughter is in a mental health unit under a 6 month section, she has been taken to a&e by them after swollowing several objects but the staff won't tell me what the doctors have said without my daughters permissio. So all the staff there know everything about my daughter but I'm being kept out of the loop, please could you advise me what I can do.
Elaine - 5-Dec-15 @ 9:20 AM
Share Your Story, Join the Discussion or Seek Advice...
(never shown)
(never shown)
(never shown)
(never shown)
Enter word:
Latest Comments
  • Lisa
    Re: How Legally Binding is a Will?
    My gran had will and she had sign by 2 witnesses and my grandad was there my gran and grandad now sadly passed and a can't find…
    18 September 2020
  • Ionnikins
    Re: Keeping Your Will Up-to-Date
    My wife and I have mirror wills. We have agreed that on first death the survivor will vary the will in order to pass on to our…
    29 August 2020
    Re: Preparing Your Will in Scotland
    My father changed his will 4 months before he passed away aged 82, he was unable to sign his will, he only mentioned 2…
    12 May 2020
  • scot20
    Re: Scottish Rights of Succession
    In a simple will, no property on a little savings, is it necessary to have a whole section on trusts as in STEP? Everything going…
    20 April 2020
  • suspicious
    Re: Preparing Your Will in Scotland
    Scotland - The main beneficiary of a will made by my uncle ( suffering from dementia) arranged for a completely new Will to be…
    8 April 2020
  • Someone
    Re: Dealing With Intestacy
    Hi, I am trying to get prepared for when my time comes when my mother passes on. There is a will and I am the sole person who will…
    2 December 2019
  • Tina
    Re: Preparing Your Will in Scotland
    My husband signed will at the later date than will itself is dated. On the last page is only his signature,no printed name and…
    23 November 2019
  • Robin
    Re: Are Verbal Changes to a Will Valid?
    My Mom passed away she had a will made in 2012 though since has wanted to make changes she told me and my sistee (whom is…
    27 July 2019
  • Ray Delta
    Re: Debt After Death
    My partner passed away in February 2019 leaving no estate assets or monies, she had a vehicle on a lease hire agreement with an £8,800. now owing.…
    7 July 2019
  • Geoff
    Re: Divorce and Revoking a Will
    Three years ago when my wife, now deceased, was in a nursing home I had a will written that left everything to my wife's great…
    4 July 2019