| How it pays | Monthly benefit after a deferred period |
|---|---|
| Typical benefit | Around 50–70% of gross earnings |
| Deferred periods | Commonly 4, 8, 13, 26 or 52 weeks |
| Payment period | Short term (e.g. 1–2 years) or to retirement |
| Claims | Can usually claim more than once |
| Underwriting | Health, occupation and income checks |
Who is this for?
- Self-employed people and contractors with no sick pay
- Employees whose sick pay is limited or short
- Homeowners who need to keep paying the mortgage
- Main earners in a household
- Company directors wanting income security
How does income protection work?
If illness or injury stops you working, income protection pays a monthly benefit once your deferred period has passed. It continues until you recover, the benefit period ends, you retire or the policy term finishes.
Unlike critical illness cover, it is not limited to a list of conditions. It covers any illness or injury that meets the policy's definition of incapacity, including many mental health and musculoskeletal conditions. Cover depends on underwriting and policy terms.
Many policies also offer rehabilitation support, such as physiotherapy or counselling, to help you return to work. Some pay a reduced benefit if you go back part-time on lower earnings.
How do I choose a deferred period?
The deferred period is how long you must be off work before payments start. Common options are 4, 8, 13, 26 or 52 weeks. A longer deferred period usually means a lower premium.
Match it to your sick pay and savings. If your employer pays full salary for six months, a 26-week deferred period may make sense. Self-employed people often need a shorter one. You can sometimes combine policies with different deferred periods.
Check exactly when your employer's sick pay reduces. Statutory Sick Pay alone is unlikely to cover most mortgages and bills.
Self-employed people should consider how long their savings would realistically last.
How much income protection can I get?
Insurers usually cap the benefit at around 50–70% of your gross earnings. This keeps an incentive to return to work and reflects that personal benefits are usually tax-free.
Self-employed and director income is assessed differently, often including dividends or profits. Check what the insurer counts as income at claim stage, not just at application.
Some policies let your benefit rise each year with inflation. Some also offer agreed-value cover, where the benefit is fixed at application rather than checked against earnings at claim.
What is own occupation cover and why does it matter?
Own occupation means the policy pays if you cannot do your own job. Other definitions, such as suited occupation or activities of daily living, are harder to claim on because they ask whether you could do any suitable work or basic tasks.
Own occupation is generally the strongest definition. Not every insurer offers it for every job. This is one of the most important things to compare.
Some policies switch to a stricter definition if you stop working for a period, such as a career break. Check how your policy treats this.
Full-term or short-term income protection?
Full-term policies can pay until your chosen end date, often retirement age. Short-term or budget policies limit each claim to a set period, often one, two or five years.
Short-term cover costs less and can still protect your mortgage through most absences. Full-term cover protects against long-term illness, which is when people are most financially exposed.
Long absences are less common than short ones but have the greatest financial impact. Think carefully before limiting cover to save cost.
What affects the cost of income protection?
Premiums depend on your age, health, smoking status, occupation, the benefit amount, the deferred period and how long the policy can pay. Manual or higher-risk jobs usually cost more to insure, and insurers class occupations differently.
Guaranteed premiums stay fixed, while reviewable premiums may rise. A longer deferred period or shorter benefit period reduces the cost, but also reduces your protection.
Why arrange income protection through OMB?
Income protection is one of the most complex protection products, and the details matter more than the price. Definitions, deferred periods and how income is assessed vary widely.
We review your sick pay, savings and outgoings, then compare insurers. It often sits well alongside life insurance and critical illness cover.
For company directors, executive income protection paid by the business can be an alternative to a personal policy. Your accountant can advise on the tax position.
How we arrange it
- Free 15-minute call
- We review sick pay, savings and outgoings
- We compare definitions, deferred periods and insurers
- Application and underwriting
- Policy starts and is reviewed as income changes
From the blogWhy mortgage borrowers need a protection plan
Read the articleFrequently asked questions
Is income protection worth it?
It can be one of the most useful protection policies, because illness or injury is far more likely than death during working life. Whether it is worth it depends on your sick pay, savings and how long you could cover your bills without income.
Is income protection taxable?
Benefits from a personally paid income protection policy are usually tax-free. Policies paid for by an employer or company, such as executive income protection, are treated differently. Take advice on your own position. Your accountant can confirm how a company-paid policy would be treated.
Can self-employed people get income protection?
Yes, and it is often especially valuable because there is no employer sick pay. Insurers usually look at your net profit or share of profit over recent years. Directors may be able to include salary and dividends, depending on the insurer.
Does income protection cover mental health?
Many income protection policies cover mental health conditions such as stress, anxiety and depression, provided the claim meets the policy's definition. Some insurers may apply exclusions based on your history. Full disclosure at application is essential. The policy wording decides how each claim is assessed.
Can I claim income protection more than once?
Yes, most policies allow multiple claims during the term. Some short-term policies limit how long each claim can last. If you return to work and the same condition recurs within a set period, some insurers waive a new deferred period.
What is a deferred period?
It is the waiting time between stopping work and the policy starting to pay, commonly 4, 8, 13, 26 or 52 weeks. A longer deferred period lowers the premium. Choose one that matches your sick pay and savings. Benefit is usually paid monthly in arrears.
Is income protection the same as mortgage payment protection?
Not quite. Mortgage payment protection usually covers only your mortgage payments for a short period, sometimes including unemployment. Income protection replaces a share of your earnings and can pay for much longer. They have different terms and costs. Some people hold both types of cover.
Does income protection cover redundancy?
Standard income protection does not cover redundancy or unemployment. It pays only when you cannot work because of illness or injury. Some separate short-term policies include unemployment cover, with their own conditions and limits. If job security is a concern, ask us about the options and their limits.
Important: Protection policies are subject to underwriting, exclusions and the policy terms. Cover is not guaranteed and will stop if you stop paying premiums. Policies have no cash-in value.