Income protection insurance helps negate the fears of not being able to pay the mortgage or meet other financial commitments if unable to work due to illness or accident. It providing a regular tax-free replacement income, calculated as a percentage of earnings, usually between 50% and 70%. Typically, an income protection policy pays out after you’ve been off work for 6 months and can pay a percentage of your salary until you are fit to return to work.
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Featured: Shepherds Friendly*
- One of the oldest and most respected mutual insurers in the world
- Excellent customer feedback and reviews
- 5 Star Defaqto Rating
- Cover from £5 a month
- Minimum term at least 5 years
- Policy covers up to a maximum of 70% of your regular gross income
- Available for UK residents aged 17 and 86
- An excellent, easy to navigate website
- Handy online Resource Centre
- A range of related financial services also available including stocks, share and ISAs, child trust funds, Junior ISAs and savings plans
- Free £50 Love2Shop voucher for new customers
- Also offers over 50s life insurance
Website: Shepherds Friendly
Please note companies are ranked in no particular order and data comes from each company’s website and was last updated in March 2023.
1. Aegon
- Originally known as Scottish Equitable
- Now one of the world’s largest providers of life insurance
- Also specialises in pensions and asset management services
- Multiple award winner including 2019 Best Claims Management / Claims Team award, Cover Protection award, Moneyfacts award, HR Specialist of the Year
- Moneyfacts 5 Star Rating
- Defaqto 5 Star Rating
- Payouts include 65% of your income if you earn up to £20,000, 55% of your income if you earn between £20,000 and £100,000, and 45% of your income if you earn over £100,000.
- Useful online resources such as a Retirement Advisory Library, Pensions Technical Zone and Retiready
- Free Health and Wellbeing service and counselling support available 365 days a year
- £128 million paid in claims last year
- Also offers general life insurance, critical illness and whole life insurance
Website: Aegon
Read the full Aegon income protection insurance review.
2. AIG
- AIG Life Limited is the UK life insurance arm of the American International Group
- Customers in more than 80 countries
- Products divided into four areas: Term Insurance, Family income Benefit, Life Start and Instant Life Insurance
- Payouts include 60% of your pre-tax annual income up to £30,000, 55% of your pre-tax annual income between £30,000 and £100,000 and 45% of any pre-tax annual income exceeding £100,000
- Applicable for those aged 17 and 54
- Generally favourable reviews and customer experiences
- Free Smart Health consultations and Best Doctors service
- Unbiased financial advisers available
- Useful supporting literature and online help
- Also offers general life insurance, over 50s, critical illness and whole life insurance
Website: AIG
Read the full AIG income protection insurance review.
3. Aviva
- Established in 1696
- The largest insurance company in the UK
- Over 15 million customers
- 5 Star rated by Defaqto
- A large range of life and health insurance plans and related products
- 98.9% of claims paid
- Medical exams not needed
- Currently offer a free £50 M&S voucher for new customers
- An informative website with plain English explanations
- Useful ‘cover calculator’ resource online
- Flexible length of cover offered
- Generally mixed online reviews
- Also offers general life insurance, over 50s and critical illness life insurance
Website: Aviva
Read the full Aviva income protection insurance review.
4. Countrywide
- The UK’s largest property services group
- A large network of consultants
- 850 branches across the UK
- A large range of related protection products across other sectors
- Policy provided by Aviva Life & Pensions UK Ltd
- Also offers mortgage, critical illness and general life insurance
Website: Countrywide
Read the full Countrywide income protection insurance review.
5. HSBC
- A trusted brand name
- One of the world’s largest banking and financial services organisations
- Income protection cover includes additional services such as specialist rehabilitation support
- Cover can be taken over a set term or until you are 68
- Eligible for UK residents aged 17 and 59
- A large range of related financial products available
- Online planning tools available to facilitate decision making
- Telephone Protection Advice service offered
- Also offers critical illness and general life insurance
Website: HSBC
Read the full HSBC income protection insurance review.
6. Legal & General
- A popular, trusted brand, founded in 1836
- One of the UK’s largest providers of life insurance
- 5 Star Defaqto rated
- 2020 Moneyfacts award winner
- A large range of individual life assurance products to choose from
- Maximum monthly benefit allowed is £20,000 per month
- Policy must end after your 50th birthday but before your 70th birthday or your planned retirement date
- Helpful online life insurance calculator
- A well informed website with decent FAQs and supporting information
- Free £100 M&S or Amazon gift card for new customers
- Also offers over 50s, mortgage, critical illness and general life insurance
Website: Legal & General
Read the full Legal & General income protection insurance review.
7. LV
- A long established, trusted brand since 1843
- Excellent customer feedback
- Winner of the Moneywise Most Trusted Life Insurance provider seven years running
- Premiums from £5 a month
- Regular benefit of up to 60% of your income
- Includes rehab support services to help you return to full health as soon as possible
- Applicable for UK residents aged 17 and 59
- Single life or joint life cover available
- Free access to LV Doctor Services
- A helpful, informative website
- Also offers mortgage, critical illness and general life insurance
Website: LV
Read the full LV income protection insurance review.
8. Nationwide Building Society
- A trusted popular brand
- The largest building society in the world
- 15% discount on life insurance for members
- Payouts up to 60% of your gross annual income
- Cover up to and including £60,000
- A large range of related financial services offered
- Well informed website
- Decent online FAQs and supporting information
- 30 day cool down period
- Also offers critical illness, mortgage and general life insurance
Website: Nationwide
Read the full Nationwide income protection insurance review.
9. NFU Mutual
- A trusted brand name within rural communities and businesses
- Owned and run by its 900,000 members
- Partnered with AIG to provide cover
- Comprehensive levels of life cover offered
- Monthly benefits are calculated as 60% of your pre-tax annual income
- Cover up to £30,000
- To qualify you must be a UK resident aged between 17 and 86
- Single and Joint Life policies available
- Also offers general life insurance, critical illness and whole life insurance
Website: NFU Mutual
Read the full NFU Mutual income protection insurance review.
10. NPA
- A long established business since 1921
- A representative voice of the pharmacy sector to government and regulatory bodies
- Products are specialist for the pharmacy sector
- Terms and decreasing cover options available
- Also offers mortgage, critical illness and general life insurance
Website: NPA
Read the full NPA income protection insurance review.
11. Royal London
- A popular, well established and respected brand
- The UK’s largest mutual life and pensions company
- 2020 Platinum Trusted Service award winner
- Some excellent online reviews from happy customers
- Covers up to 65% of the first £15,000 of your pre-tax earnings, plus up to 55% of the remainder
- Up to £250,000 a year
- Self employed individuals can also claim certain regular fixed overheads such as business rental costs
- Policy also includes fracture cover and hospitalisation payment as standard
- A large range of insurance, pension, investment, retirement and funeral products offered
- A helpful website with decent access to FAQs and online resources
- Also offers general life insurance, over 50s, critical illness, mortgage and whole life insurance
Website: Royal London
Read the full Royal London income protection insurance review.
12. Sanlam Wealthsmiths
- A well-established life insurance company over 100 years old
- Strong range of related financial services offered
- Personalised policies available for tailored needs
- Defaqto 5 Star Rating
- Multiple award winner including Private Asset Manager Awards 2019, Wealthnet and Investors Choice
- Also offers critical illness and general life insurance
Website: Sanlam
Read the full Sanlam income protection insurance review.
14. Sovereign Health Care
- One of the UK’s leading cash plan providers
- Long established since 1873
- Some decent online reviews
- Partnered with PG Mutual to offer a tailored Income Protection plan
- No penalties for making claims against your policy
- Policy holders get access to a member benefits scheme which provides discounts on popular brands and services
- 15% discount on the first two years of cover
- Free £50 One4all vouchers for new customers
Website: Sovereign Health Care
Read the full Sovereign Health Care income protection insurance review.
15. Vitality
- A popular, family brand
- Excellent reviews and great customer feedback
- A large range of cover options to choose from
- Covers up to 60% of gross salary
- Protection for the first £5,000 per month and 50% thereafter
- £100 per day contributions towards hospital costs
- Up to 40% off life insurance premiums for the first year
- A helpful, informative website
- Useful online resources and supporting documents
- 5 Star Defaqto Rating
- Also offers general life insurance, mortgage, critical illness and whole life insurance
Website: Vitality
Read the full Vitality income protection insurance review.
What is income protection insurance?
Income protection insurance helps negate the fears of not being able to pay the mortgage or meet other financial commitments if unable to work due to illness or accident. It providing a regular tax-free replacement income, calculated as a percentage of earnings, usually between 50% and 70%.
Typically, an income protection policy pays out after you’ve been off work for 6 months and can pay a percentage of your salary until you are fit to return to work. You can claim income protection insurance as many times as you need to, whilst the policy lasts.
Many people take out income protection to help maintain an accustomed standard of living, pay off the mortgage, credit card and other debts or school fees, and to help cover the cost of recovery. Income protection is particularly useful if your job is your main or sole means of supporting yourself or if you have a family or own a business.
How does income protection work?
Income protection insurance pays you a regular income if you can’t work because of sickness or disability and continues until you return to paid work or you retire. When you take out Income Protection insurance, you are likely to be able to choose between several different variables.
Crucially, the first will be how soon the payments would start in the event of sickness or injury. Secondly, you will likely be able to choose how long the payments would be paid for. Both options will affect your premiums. In policy terms, you can select a waiting period of between one and 12 months; the longer you defer, the cheaper the policy.
Payments usually start after any sick pay ends or other insurance stops covering you, and it usually pays out until you either return to work, retire, the policy expires, or death.
What does income protection cover?
Income Protection is designed to cover illness and injury, and will pay out a percentage of your earnings, usually between 50% and 70%. This is also the case for those who are self-employed.
Income protection should also cover you for a short period of time if you have to stop work temporarily due to mental illness. However, you’ll need medical proof that mental illness is the cause. The same applies for stress related illness; if your doctor agrees that you are suffering from stress and that you are unable to work during this time period, you will be eligible for protected leave.
There are a few instances where you may not be covered via income protection, for example if you undertake dangerous activity without suitable protective equipment or training.
Income protection insurance is also unlikely to cover involuntary unemployment, such as being sacked or being made redundant, and your insurer is unlikely to pay out if your behaviour at work leads directly or indirectly to your dismissal.
Why have income protection insurance?
Income protection insurance is a long term insurance policy designed to help you if you can’t work because you’re ill or injured. The payment of an income protection benefit allows you to continue to afford to pay for living expenses and financial commitments, usually up to the value of 75% of your gross income.
Accidents and sickness can happen to people of all ages, fitness levels and walks of life, so it is reassuring to know that you have protection against the cost of household bills and life’s essentials.
Income protection insurance can help you to pay mortgage or rent payments, bills, childcare costs, school fees, loans, household improvements, holidays and more, helping you to maintain the standard of living you are accustomed to.
How much does income protection cost?
Income protection insurance in the UK can cost anywhere from £10 a month to £80 per month. Short term policies are usually more affordable than longer policies. How much cover you might need will depend on your take home pay, day to day living costs, debts and your mortgage or rent payment levels, and everyone will have differing circumstances.
For example, someone in their 20’s with no mortgage or children, won’t have the same needs as someone in their 30’s with a home, a family and a larger income. Factors that affect the amount you pay include your age, marital status, health, the amount covered, term of the policy, waiting period, and whether you smoke.
The insurance product that is right for you should reflect your personal circumstances and what you want to protect. You are allowed to have multiple income protection policies.
* Please note this is an affiliate link.
Also see: What Is the Difference Between Life Insurance vs Income Protection