Do I need income protection insurance?

It's one of those questions almost nobody enjoys thinking about — what would happen to your income if you couldn't work for a while? Let me walk you through what income protection actually is, so you can weigh it up calmly rather than guess.

What income protection insurance actually is

Income protection is a type of insurance designed to pay you a regular, tax-free income if you can't work because of illness or injury. Instead of a single lump sum, it's meant to replace part of your usual earnings while you're unable to work — a bit like a safety net under your salary.

The payments usually start after a set waiting period (often called the deferred period — the gap between falling ill and the policy paying out) and can continue for a defined length of time, or until you're well enough to return to work or reach retirement, depending on the plan you choose.

The key idea: it protects your ability to earn, which for a lot of people is the thing quietly holding everything else — the rent or mortgage, the food shop, the direct debits — in place.

What it can (and can't) cover

Cover varies a lot between policies, so it's worth knowing the moving parts rather than assuming they all work the same way:

• What triggers a claim — typically being unable to work due to illness or injury. Redundancy is a different thing entirely and generally isn't covered by income protection.
• How much it pays — plans usually replace a portion of your income rather than all of it, so there's always a gap to plan around.
• When it starts — the longer the deferred period you choose, the later payments begin. Many people line this up with how long their savings or employer sick pay would realistically last.
• How long it pays — some plans pay for a shorter, fixed period per claim; others can pay right through to retirement if you stay unable to work. These are quite different products.

It also won't usually cover conditions you already have unless the insurer agrees to include them, and every policy has its own definitions and exclusions — which is exactly why the wording matters more than the headline.

Questions worth sitting with before you decide

Whether you need it really depends on your own situation. I can't tell you the answer — but here are the honest questions that tend to bring it into focus:

• What would you actually live on? If your income stopped for a while, what's already there — savings, a partner's income, employer sick pay?
• How long would your employer keep paying you? Some workplaces offer generous sick pay for a period; others drop to statutory support quite quickly. It's worth checking your contract.
• Who depends on your income? A single earner with a family and a mortgage is in a very different position from someone with no dependants and a big cushion of savings.
• Are you self-employed? If there's no sick pay behind you at all, the gap you'd be covering can look quite different.

There are no right or wrong answers here — just your circumstances. The point is to see the size of the gap clearly before deciding whether insurance is the way you'd want to fill it.

How it differs from other protection

People often mix these up, so here's the plain-English version of how the main types differ:

• Income protection pays a regular income while you're unable to work due to illness or injury.
• Critical illness cover usually pays a one-off lump sum if you're diagnosed with one of the specific conditions listed in the policy — it's tied to the diagnosis, not to whether you can work.
• Life insurance pays out when you die (or, on some plans, if you're diagnosed as terminally ill), so it's protecting the people you'd leave behind rather than your day-to-day income.
• Short-term or payment-protection style cover tends to pay out for a shorter, capped period and can work quite differently again.

None of these is automatically 'better' — they solve different problems. Some people hold more than one; some hold none. It comes down to which risk you're most concerned about closing.

The small print that genuinely matters

If you do look into a policy, these are the details that shape what you'd actually get — and where a good conversation earns its keep:

• 'Own occupation' vs 'any occupation' — whether the policy pays out if you can't do your job, or only if you can't do any job. This one difference can change everything about a claim.
• Guaranteed vs reviewable premiums — whether the price is fixed for the term or can be reviewed over time.
• Exclusions and definitions — how the policy defines illness, incapacity and any conditions it won't cover.
• How it fits your other cover — including anything you already get through work.

These aren't things to skim. Two policies at a similar price can behave very differently at the moment you'd need them, and the wording is where that shows up.

This guide is general information, not advice. This guide is general information, not advice.