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Income protection insurance is designed to provide financial support if you’re unable to work due to illness or injury.
It’s a topic that raises a lot of questions, especially around what it does and doesn’t cover. Here, we answer some of the most frequently asked questions to help you understand how it works.
Losing your income unexpectedly can be stressful, particularly if you have a mortgage or other financial commitments.
Income protection insurance provides a regular payout to help cover essential expenses while you recover, offering reassurance that your finances are taken care of during difficult times.
Without it, you may have to rely on savings or limited sick pay from your employer, which might not be enough to maintain your usual standard of living.
The length of cover depends on the type of policy you choose. Some income protection insurance policies provide short-term cover, typically lasting between one and five years.
Others offer long-term protection, continuing until you reach retirement age or are able to return to work.
Yes, many income protection insurance policies include cover for mental health conditions such as depression, anxiety, and stress-related illnesses.
The level of cover varies between providers, so it’s important to check the details of a policy before taking it out. Some insurers may have exclusions or waiting periods for pre-existing mental health conditions.
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Yes, self-employed workers can take out income protection insurance. Since they don’t have access to employer sick pay, it can be particularly useful for maintaining financial stability if they are unable to work.
Insurers will typically assess your average earnings to determine how much cover you can receive.
Income protection insurance doesn’t cover redundancy, voluntary unemployment, or pre-existing conditions that were excluded from the policy.
Some policies also have restrictions on certain medical conditions, so it’s always worth checking the terms before applying. Other exclusions may apply depending on the provider and the level of cover chosen.
Income protection insurance applies when you are unable to work due to illness or injury.
Policies typically have a waiting period before payments begin, which can range from a few weeks to several months.
Choosing a shorter waiting period usually increases the cost of the policy, while a longer waiting period reduces premiums.
Policies vary on this. Some income protection insurance policies allow part-time work or lower-paid roles if you are unable to return to your original job, while others may reduce or stop payments if you take on any form of work. Always check your policy’s terms to understand how it applies.
Income protection insurance is not designed to cover standard maternity leave, as this is a planned life event.
That said, if you experience pregnancy-related complications that prevent you from working beyond your expected leave period, some policies may provide cover.
Each insurer has different terms, so it’s worth reviewing the policy details to understand what is included.
It’s possible to hold more than one income protection insurance policy, but insurers will usually cap the total amount you can claim across all policies.
This is to prevent someone from receiving more than a certain percentage of their regular income while off work.
If you already have cover through your employer, it’s worth checking how an additional policy might affect your total payout.
The amount you receive is usually based on a percentage of your pre-tax earnings, typically ranging from 50% to 70%.
The exact figure depends on the insurer, your occupation, and the level of cover you choose.
Premiums are calculated based on factors such as age, health, and the length of the waiting period before payments start.
If stress prevents you from working and is recognised as a medical condition by a doctor, you may be eligible for a claim.
Many income protection insurance policies cover stress-related absences, but the terms can differ between providers. Some may require evidence of long-term impact before payments begin.
Yes, being on an income protection insurance claim doesn’t automatically prevent you from getting a mortgage.
Lenders will assess your overall financial situation, including your income and the terms of your policy, before making a decision.
Some may require additional proof of income stability before approving an application.
Income protection insurance payments may be considered as income when calculating Universal Credit entitlement.
The impact will depend on the amount you receive and how it fits within the benefits system. It’s worth checking with an advisor to understand how it may affect your specific situation.
Income protection insurance doesn’t cover redundancy or job loss due to company closure. It only applies if you are unable to work because of illness or injury.
If you become unemployed and later develop a medical condition, you may not be eligible to make a claim, as most policies require you to be actively working at the time of illness or injury.
Income protection insurance policies can be short-term or long-term.
Short-term cover usually lasts between one and five years, while long-term policies can continue until retirement or when you’re able to return to work.
The right choice depends on your financial situation and how long you would need support if you were unable to work.
No, income protection insurance and Payment Protection Insurance (PPI) are different.
PPI is linked to specific debts, like a loan or credit card, whereas income protection insurance provides broader cover for loss of earnings due to illness or injury.
PPI policies have also been subject to mis-selling in the past, whereas income protection insurance remains an active and widely used form of financial security.
No, income protection insurance is designed to cover loss of earnings due to health-related reasons. If you leave your job voluntarily, you won’t be able to make a claim.
Some policies may continue to provide cover if you move to a new job, but you would still need to meet the eligibility criteria for a payout.
Understanding income protection insurance can help you decide whether it’s the right choice for your situation.
With different policies available, speaking to a protection advisor can make it easier to find cover that suits your needs.
If you’d like to explore your options, our team at UK Moneyman is here to offer expert support.
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UK Moneyman Limited is Registered in England, No. 6789312
Registered Address: 9 Gallows Lane, Beverley, United Kingdom HU17 7FJ.
Authorised and Regulated by the Financial Conduct Authority.
We are entered on the Financial Services Register No. 627742 at www.register.fca.org.uk.
© UK Moneyman Limited 2025.
UK Moneyman Limited is Registered in England, No. 6789312
Registered Address: 9 Gallows Lane, Beverley, United Kingdom HU17 7FJ.
Authorised and Regulated by the Financial Conduct Authority.
We are entered on the Financial Services Register No. 627742 at www.register.fca.org.uk.
© UK Moneyman Limited 2025.
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