Income Protection Guide

Most people insure their car, their home and their phone, but not the income that pays for all of it. Only around 9% of UK workers have income protection cover, despite 1 in 4 people suffering a condition that keeps them off work for a month or more at some point in their career. Statutory Sick Pay is £116.75 a week for up to 28 weeks, and the self-employed get nothing at all from the state in the first year of illness. For a £48,000 earner, that gap can mean living on essentially zero within seven months of falling ill.

The guide explains how income protection actually works: the three levers of deferred period, benefit period and benefit amount; why the incapacity definition (own occupation, suited occupation or any occupation) is the single most important clause in the contract; and how to size cover around your real monthly outgoings rather than a generic percentage. It walks through the difference between short-term ASU policies and long-term cover to retirement, the tax treatment of personal versus employer-paid policies, and seven common mistakes that leave people exposed. A worked example follows Rachel, a 38-year-old self-employed HR consultant on around £62,000 net profit, whose 18-month spinal claim would have paid out roughly £61,200 against premiums of about £85 a month — had she put a policy in place before the injury appeared in her medical history.

It is written to help UK workers protect their income properly, not to sell a product. Read it in about fifteen minutes.