Income Protection
Income Protection is a monthly benefit payment, paid monthly in the event you cannot work due to long term illness. Unlike Critical Illness insurance which pays a lump sum, this benefit is paid monthly to replace a lost salary for up to 2 years.
How does it work?
When the policy is set up, you decide the monthly amount of benefit you would like to receive. There are some rules around this. The benefit is paid tax free, but it cannot be more than your current salary. Depending on your current salary, the monthly benefit amount is usually restricted to your current salary less tax depending on your tax bracket.
The benefit is paid tax free, so your take home pay will be roughly equivalent, however you can reduce the monthly benefit (as your outgoings are usually less when sick) and this will reduce the monthly premiums.
The policy can be set up and will respond to a valid claim from the start date until the day you retire, or a time to suit you. However just note, when a valid claim is made and covered, the policy will only pay out for a maximum of 2 years. However once you go back to work and stop claiming the policy remains live, ready to respond again in the future to another claim.
How much does it cost?
Once the policy is live you will pay a monthly premium for the cover. For example for just £7.16 per month, you could have £1,500 per month tax free in the event of a valid claim*
The policy can be set up for any period of time, for just a few years or until the day you retire. As long as you maintain the monthly premiums, the policy will remain live and ready to respond to a valid claim. Just remember the pay out period is only 24 months.
Most employers offer sick pay, but the amount and duration depends on your employer. To reduce your monthly premiums the policy can kick-in after your sick pay finishes. For example if your company pays 3 months sick pay only, then your policy could activate on month 4. This will reduce your monthly premiums.
Income Protection Providers
Income Protection Insurance is provided by insurance companies, many of them are household names like Aviva, Zurich, Vitality and Legal & General. There are other more specialist providers who will offer more bespoke policies.
Income Protection Insurance can be obtained by most people including those who may have existing medical conditions or have a history of illness, but the monthly payments may be higher.
What affects the cost of the policy?
The monthly payments for your policy can be fixed for the full length of the term (i.e. 20 years) so you pay the same amount per month for the full term.
Factors that affect the cost relate to your health and jobs that could be considered more dangerous, for example oil rig workers, may pay higher monthly payments as well.
Using an Insurance Broker to arrange your cover
First Select Life Insurance arranges Life, Critical illness and Income Protection insurance from a range of leading providers and specialists. Not all policies are the same and selecting your cover based just on price, means your not comparing all features and benefits.
For just a few extra pounds per month, a policy could provide much more benefit, but this is not always clear on price comparison sites and consumers very rarely read policy documents. First Select Insurance Brokers check and compare policies and clearly call out the differences to our clients.
Ready to find out more?
Please complete the contact form below and one of our experts will be in touch, usually same day.
About us
First Select Life Insurance are friendly and professional mortgage and insurance brokers. We can access mortgages and insurance from the whole of the UK market, meaning we can get the best possible deal for our clients circumstances. Based in Manchester, we are a family business with decades of experience in financial services. Our goal is to be the most trusted regional mortgage and insurance advisory business in the northwest of England.
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References:
Quotations, 23/06/2026 based on non-smoking male aged 30. 24 months payment period till age 60.
*Income Protection: £1,500 per month decreasing indemnity. Monthly Premiums £7.16. Aviva.
Source: https://www.aviva.co.uk/insurance/life-products/life-insurance/knowledge-centre/paying-out-when-you-need-it/