11 Purdeys Way, Rochford, England, SS4 1ND
11 Purdeys Way, Rochford, England, SS4 1ND
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Everything You Need to Know About Income Protection Insurance in the UK.
Income Protection Insurance provides individuals with financial assistance should they suddenly face a loss of income due to illness or injury. It’s designed to replace lost income and help cover living costs, including mortgage payments and rent, food, transport and bills.
Salary Income Protection Insurance in the UK can be taken out as an individual policy or as part of an employer group plan for various amounts and periods. The benefits that are payable under Income Protection Insurance vary depending on the type of policy you choose.
It’s important that you understand the needs of you and your employees before purchasing an Income Protection policy so that they can make an informed choice about the right level of cover. Salary Protection Insurance provides peace of mind should you or your employees ever find yourselves in need of financial support due to unexpected illness and being unable to work.
One of the best ways to provide financial support for your business, directors and employees is through Salary Protection Insurance. This type of insurance provides financial support if you’re unable to work due to illness or injury, and helps you maintain your lifestyle and meet financial commitments (such as a mortgage or utility bills).
At My Keyman Insurance, we offer a variety of salary protection options, including Executive Income Protection to help provide the business and key person with financial support, along with Key Person Income Protection, which safeguards your business against the loss of a key employee. We also have Self Employed Income Protection, which provides self-employed individuals with a regular income, even if they are unable to work due to illness or injury.
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Income Protection Insurance in the UK covers a portion of your salary if you’re unable to work due to illness or injury. It provides regular, tax-free monthly payments, which will typically be between 50% to 80% of the salary, depending on your plan and the type of Income Protection Insurance you have.
The funds from Salary Income Protection Insurance can be used in various ways, whether it’s paying for household bills, mortgage and rent payments, among other things. In most cases, the payments continue until you’re able to get back to work, until you retire or until the policy runs out.
Feel free to call and speak to one of our advisors if you need more information on the different types of income protection, including self-employed income protection, and which one may be best for you.
Not all income protection policies are the same. Let’s break it down in plain English.
Think of this as the big safety net. Also called Permanent Health Insurance (PHI), it pays you a regular income if you’re off work long-term because of illness or injury. In many cases, it keeps going until you retire or the policy runs out, whichever comes first.
Most Long-Term Salary Protection Insurance plans cover around 50% to 70% of what you earned before you got sick, and better still, the payouts are usually tax-free. If you’re planning for serious “what if” scenarios, this kind of cover is well worth a look.
Not everyone needs cover until retirement, and that’s where short-term policies come in. They pay out for a set period (typically 1 to 5 years), helping you keep the lights on while you recover. It’s a good fit if you’re confident you’d get back on your feet within a few years. Plus, premiums are often cheaper than long-term policies with this type of Income Protection Insurance.
Your mortgage doesn’t press pause when life gets tough. MPPI is designed to step in and cover your mortgage payments if you can’t work due to illness, injury, or redundancy.
Unlike full Income Protection Insurance, it focuses purely on your mortgage, usually for up to two years. It’s a simple, focused way to make sure you stay on top of the biggest bill most of us have.
If you’re a business owner, director, or high earner, executive income protection could be a smarter move. It often replaces up to 80% of your income and can be tailored with extras like rehab support and guaranteed upgrades as your salary grows. It’s built to protect people whose financial responsibilities go beyond just themselves.
Offered by many employers as part of a benefits package, group cover looks after employees who can’t work for medical reasons. It typically covers a slice of your salary and can include support to help you get back on your feet and back to work faster.
Which one’s right for you?
It depends on your life, your job, and your priorities. Some people want full Income Protection Insurance until retirement. Others just want help with the mortgage while they get back on track.
Feel free to call and speak to one of our advisors if you need more information on the different types of Salary Protection Insurance in the UK, including self-employed income protection, and which one may be best for you.
The price of Salary Protection Insurance depends on a few key things, including:
In short, premiums are based on how much risk the insurer is taking on, and the level of cover you’re asking for. As a rough guide, you can expect to pay somewhere between 1% and 3% of your annual income. If you’re looking for a higher payout, need the benefit for a long time, work in a high-risk occupation, or want a very short waiting period, your premium could be higher. Likewise, older applicants or those with pre-existing medical conditions may see their costs climb too.
Most Income Protection Insurance policies replace a chunk of your income if you’re unable to work, which is usually somewhere between 50% and 70% of your gross salary before you became ill or injured.
The payments are typically made monthly and continue until you either recover, reach the end of your policy term, or hit retirement age (depending on what you chose when you took out the policy).
Income protection isn’t for everyone, but for many people, it’s one of the smartest investments they’ll ever make.
Here are a few things to think about:
If losing your paycheque would put you under serious financial pressure, Income Protection Insurance could be a vital safety net.
Got a mortgage, loans, or people depending on your income? This cover can help you meet your obligations, even if you can’t work for months or longer.
Your mortgage doesn’t press pause when life gets tough. MPPI is designed to step in and cover your mortgage payments if you can’t work due to illness, injury, or redundancy.
Unlike full Income Protection Insurance, it focuses purely on your mortgage, usually for up to two years. It’s a simple, focused way to make sure you stay on top of the biggest bill most of us have.
If you have a substantial emergency pot that could cover a year or more of living costs, you might not need as much cover. But if you’d struggle after just a few months, it’s worth considering.
Some workplaces offer sick pay or long-term disability insurance. Check what’s already in place before you buy a separate policy as you might only need a top-up.
Be honest: if you have existing health conditions or work in a riskier profession, your chances of needing income protection go up.
Premiums vary depending on how much cover you want and how long you can wait for payments to kick in. It’s important to find the balance between what you can afford now and the peace of mind you want for the future.
Need help deciding?
Choosing income protection is a big decision, and no two people are the same. If you want straightforward advice (without the jargon), our team is ready to help you explore your options and find the right policy for your situation.
Are you ready to protect you and your employees’ income should the worst happen? My Keyman Insurance is here to help you protect your income and support your business. Along with Salary Protection Insurance in the UK, we can also help you find various other types of insurance, including Family Income Benefit. Apply for a quote today!
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Jody was very helpful in explaining the options and I thoroughly recommend his company
We received a wonderful service from mykeyman and will be using them again. The service and product knowledge from team is excellent. Everything was made easy to understand. The price was the best we found too.
I had a great time working with My Key Man Insurance when I applied for the different insurances they offer. They were able to answer all of my questions quickly and effectively. I will recommend them to my friends and family.
Jody was very helpful in explaining the options and I thoroughly recommend his company
The standard of service was first class. They kept me up to date with progress on my Relevant Life Policy, followed up promptly following delays caused by my medical practice being slow in compiling reports, and responded instantly and clearly to any questions I had.
We received a wonderful service from mykeyman and will be using them again. The service and product knowledge from team is excellent. Everything was made easy to understand. The price was the best we found too.
Jody was very helpful in explaining the options and I thoroughly recommend his company
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Still have questions about Salary Income Protection Insurance? Hopefully our FAQs will help:
It depends on how your policy is set up:
✔️ You personally paid: Your payout is usually tax-free.
✔️ Your employer paid: The payout is likely taxed as salary (through PAYE).
✔️ Unsure: It’s best to speak to an accountant for tailored advice.
Theoretically, you can take out as many Salary Income Protection Insurance policies as you like. However, you will be limited to only being able to cover a set percentage of your income. You can’t change this by taking out more policies and you need to make sure that you don’t exceed the max allowed. If you do make a claim, you will be asked whether you have a continuing income. This does include any other insurance policies that you have taken out. If you have multiple Income Protection Insurance policies, this will impact the level of cover that you are provided. Depending on the plan you choose you may be able to cover up to 65% of earnings and you can do this across multiple plans.
The amount of time Income Protection Insurance is paid for will differ depending on your policy. Short term policies will cover anything from a couple months to a couple years. In contrast, long term policies will typically continue to payout until you retire or until you are able to return to work. It’s important to discuss the length of the policy when you are applying for this type of coverage. You need to make sure that the length of coverage suits your needs.
There are multiple ways to compare Income Protection Insurance in the UK, such as using a comparison website like Compare the Market. One of the great advantages at there is that you can arrange for companies with the best quotes to contact you directly. You can also contact companies individually and ask for an income protection quote. Make sure that you research the best companies and pay particular attention to customer care standards. It’s important that you find a business which will offer the full support you need.
If you suffer from a disability that means you are unable to work, you will be able to claim on your Income Protection Insurance plan. However, this will only provide coverage for the length of the plan you have taken out. Long-Term Income Insurance plans can continue to pay until you retire, pass away or reach an age that is set in the policy terms. You could also claim for an existing disability that has gradually become worse and left you unable to work. Be aware that insurance protection plans will often require you to provide information on any illnesses or disabilities that you already suffer from, which will impact the premium for your coverage. Certain permanent disabilities are not covered as part of specific plans.
Income Protection Insurance covers a wide range of illnesses, which will differ depending on the policy and the company that you choose. However, you could get cover for anything from illnesses caused by stress to a serious heart condition. It’s a good idea to ask about which illnesses are covered before taking out a policy.
Income protection insurance will not impact your sick pay. Instead, the insurance is designed to provide cover once the sick pay ends. Employees differ on how long they will provide financial support to an employee who is injured or has fallen ill. The longer you are provided sick pay, the longer you will be able to hold off claiming on your insurance coverage.
You can’t claim on Income Protection Insurance if you are working. Income protection Insurance in the UK is specifically designed to provide support during a time when you are unable to work. You will face serious issues if you attempt to claim while you are still able to work and thus earn a full income. Theoretically, you may still be able to earn some form of income and claim on your coverage. However, this will drastically impact the level of payout that you receive.
Typically, you will have to wait about four weeks after you stop working before your payments begin. This duration is called the waiting period. While some policies have waiting periods as long as two years, this is quite rare. However, premiums can cost less if you are happy to take a policy with a longer wait period.
It’s easy to get confused between Income Protection Insurance and Accident, Sickness, and Unemployment (ASU) Insurance — they sound pretty similar at first.
But there are some important differences to be aware of:
| Feature | Income Protection Insurance | ASU Insurance |
|---|---|---|
| Coverage | Replaces part of your income if you can’t work due to illness or injury, potentially up to retirement. | Covers short-term needs such as accidents, sickness, or unemployment, usually up to 12–24 months. |
| Benefit Type | Monthly payments based on your pre-disability income, typically tax-free. | Monthly or lump sum payments for a limited time. |
| Waiting Period | A few weeks to a few months before payments begin. | Shorter waiting periods — often just a few days or weeks. |
| Premium Costs | Depends on age, health, job type, coverage, and waiting period. Generally lower per coverage unit for longer-term protection. | Can be relatively higher given shorter benefit duration and additional unemployment cover. |
| Unemployment Cover | Not typically included — covers only illness or injury. | Specifically covers redundancy or involuntary job loss along with illness and accidents. |
In short:
Income protection is about long-term illness or injury.
ASU insurance focuses more on short-term emergencies, including losing your job.
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The information on this website is provided for general guidance only and does not constitute financial, tax or legal advice. The suitability and tax treatment of any cover will depend on your individual circumstances and may change in the future.
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