Do I Need Income Protection Insurance?

Income protection insurance is a policy designed to replace your income if you’re unable to work due to illness or injury. This could cover anything from minor issues like the flu to serious conditions like cancer. This type of insurance is different from critical illness cover, which pays a lump sum upon diagnosis of specific conditions. Instead, income protection provides ongoing monthly payments, usually covering a percentage of your regular pre-taxed income, helping you maintain your lifestyle while you recover.

Is Income Protection Worth It?

If you were suddenly unable to work, how long could you rely on savings or sick pay to cover your rent, mortgage, bills, and daily expenses? For most people, their job is their primary source of income, and losing it due to illness or injury can be devastating. 

In the UK, employees are entitled to statutory sick pay (SSP) of just £109.40 per week (as of 2024) for up to 28 weeks if they are too ill to work. For many people, this is far less than their usual income, making it difficult to cover essential expenses like food and bills.

Here are a few common scenarios where income protection can be invaluable:

Serious illness 

A serious illness, such as cancer, heart disease, or a stroke, can require extended recovery periods, during which you may be unable to work. While some employers offer sick pay, many do not provide cover beyond the statutory sick pay. Income protection can bridge this gap, ensuring you continue to receive a percentage of your salary (typically 50-70%) until you’re able to return to work or the policy term ends. This can provide financial stability to cover medical bills, mortgage payments, or household expenses, allowing you to focus on your recovery.

Injury

Unexpected accidents, such as a car crash, a workplace mishap, or a sports injury, can lead to extended periods off work. For instance, a broken leg might prevent you from performing physical tasks, while spinal injuries could result in months of rehabilitation. Without income protection, you could struggle to pay rent, bills, or other essential costs. A good income protection policy ensures that even during a long recovery, you can maintain your standard of living without dipping into savings or accumulating debt.

Disability

Living with a disability, whether it’s due to an illness or injury, can significantly impact your ability to earn a living. A long-term disability may prevent you from returning to your previous role or working at all. In these situations, income protection provides an ongoing income, which can be a lifeline for covering everyday expenses, adapting your home, or paying for care. It ensures financial security, giving you the means to focus on adjusting to your new circumstances and maintaining independence.

Who Should Consider Income Protection Insurance?

Income protection insurance is particularly useful for individuals whose financial security depends heavily on their monthly salary. Here are some examples of who might benefit the most:

Self-employed individuals

If you’re self-employed, you don’t have the luxury of company-provided sick pay. Self-employed income protection is a great way to protect the money you generate. 

People with limited sick pay

Many employees have minimal sick pay from their employer, which may not be enough to cover extended periods away from work.

Primary earners

If your household depends on your income for rent, mortgage payments, or bills, income protection can support your family financially during tough times.

Individuals without savings

If you have limited savings, this insurance can help prevent financial hardship or the need to return to work too early due to a health issue.

Get a Quote for Income Protection from The Insurance Surgery Today

Now that we’ve answered your questions regarding ‘Do I need income protection insurance?’ and ‘Is income protection insurance worth it?’, get in touch with The Insurance Surgery. Your earning power is one of your greatest assets and deserves to be protected. For more information or expert advice, contact us today.