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UK Income Protection Insurance

Financial safety should the unexpected happen.

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What is Income Protection Insurance?

In the event that an insured individual finds themselves unable to work due to illness or injury, Income Protection Insurance pays a monthly benefit usually up to a maximum of 70% of gross income. This is intended to provide the financial support necessary to cover bills, mortgage or rent, and other living expenses.

There are various types of insurance policies that come under the wider umbrella of Income Protection such as Accident and Sickness Insurance, which looks to address specific risk factors which may be more common in certain professions. Policies can be tailored to provide many different levels of cover and meet the needs of each individual.

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Different types of Income Protection

The number and range of Income Protection products available in the UK is extensive and new policies to meet the needs of an ever more diverse workforce are coming to the market every year.

As a whole-of-market consultancy, Black Lion Insurance can provide advice on the most suitable products to meet an individual’s need and budget.

Long Term Income Protection Insurance

Can provide coverage up until retirement age or a specified date usually of five years or more. These policies will generally pay a benefit of up to 70% of annual earnings and provide a more extensive financial safety net for individuals wishing to guard against the the financial impact that a serious, long-term illness or injury would cause. Short-term Income Protection can be arranged for periods of less than 5 years and these policies will often have lower premiums but may be less suitable for individuals who wish to mitigate the financial impact a career-ending illness could cause.

Accident & Sickness Insurance

Generally these policies are renewable annually and pay a maximum of 12 months benefit in the event of a valid claim. Because of the shorter term, the policies are not subject to full medical underwriting, although the maximum monthly benefit is unlikely to exceed £2k. Accident & Sickness Insurance is therefore often more popular with self-employed workers who are at a higher risk of suffering a short-term physical injury than a career-ending illness.

Unemployment Insurance

Usually covers a period of up to 12 months should the insured individual lose their job due to involuntary redundancy. In 2023, Unemployment Insurance is generally only available as part of a wider Accident, Sickness and Unemployment (ASU) policy.

Group Income Protection

Group Income Protection policies are designed for businesses who wish to offer a comprehensive benefits package or enhanced sick-pay to at least three employees or more. In the event that an employee is unable to work due to a prolonged illness or injury, the insurer makes a monthly payment to the company who then pass the benefit on to the employee via payroll. Payments can also be used to cover pension and national insurance contributions.

Executive Income Protection

Similar to Group Income Protection where the policy holder is a business, Executive Income Protection can be more suitable for smaller businesses who do not have sufficient number of employees to benefit from Group Income Protection or where the individuals covered are directors. Policies can also cover additional benefits such as pension contributions, car allowances, dividends etc.

Protecting Your Future Income

A person’s ability to earn an income is arguably often one of their most valuable assets. For example, a 30-year-old earning £60,000 per year with a 3% annual wage increase would accumulate over £3.5 million in earnings over a 35-year period. By taking out an Income Protection policy, individuals can help safeguard this significant asset and avoid the potential of financial hardship during challenging times.

With an estimated 2.5 million adults in the UK of working age on long-term sick leave (Office of National Statistics Nov 2022), the risk of experiencing an unwanted break in employment is very real.

Furthermore, in 2023, Statutory Sick Pay in the UK amounts to only £96.35 per week for up to 28 weeks. For the vast majority of the population this would not be sufficient to cover essential expenses.

By providing a reliable income during challenging times, Income Protection Insurance helps to ensure that people can focus on getting back on their feet without the stress of being unable to meet their financial obligations.

Given that in many cases, Income Protection policies can cost the equivalent of less than 1% of gross earnings, it is considered by many to represent good value.

Who should consider Income Protection?

Both employed and self-employed professionals can benefit from Income Protection Insurance. However, it’s particularly popular among self-employed individuals, contractors, and company directors who may not have the same level of job security or employee benefits that traditional employees enjoy. Individuals in traditional employment without comprehensive sick pay benefits might also find Income Protection Insurance to be a cost-effective way to attain greater financial security.

An individual’s personal and financial situation plays a crucial role in determining the need for Income Protection. For those with little or no savings, the prospect of going without an income for an extended period can be incredibly daunting.

In contrast, individuals who have built up a substantial savings buffer or own valuable assets might not want to rely solely on their savings in case of illness or injury. In this scenario, Income Protection can provide a reliable income stream to help people preserve their hard-earned savings and assets during tough times.

How Much Does Income Protection Cost?

For individual policies, there are a number of contributing factors that will collectively affect the cost of a policy’s monthly premium.

The summary below addresses some of the main factors that are considered, together with an indication as to how these factors could affect the cost of an Income Protection policy if all other factors are equal.

Amount of Cover

The lower the amount of insured income, the lower the premiums will be.


Insurers are likely to consider older individuals more likely to develop health issues that will prevent them from working. Therefore, premiums generally increase with age.


Higher risk occupations will almost always result in higher premiums, with the most dangerous jobs (i.e. Deep Sea Diver) being considered uninsurable by some providers.

Deferred Period

This is the period of time between the insured individual being unable to work and the policy’s monthly benefit starting to pay out. The longer the deferred period, the lower the policy’s premiums.


Insurers will consider any pre-existing conditions and an individual’s medical history. Depending on the nature or severity of the issues, they may result in a higher monthly premium.


Smokers or those who use nicotine products or vape are likely to incur higher premiums.


Policies that are indexed against inflation so that the payable benefit increases over time will be more expensive than non-indexed policies.

Policy Duration

A policy that would pay a benefit up until retirement age is likely to be more expensive than a policy which pays a benefit for a maximum of 3 years.

The process of obtaining an accurate quote for Income Protection is not something that can currently be fully automated. While it is possible to provide a preliminary or indicative quote based on the factors above, insurance providers often have secondary questions before providing a final cost for any particular policy.
As Income Protection is a long-term insurance product, it is highly recommended that those considering taking out a policy seek qualified advice and obtain quotes from more than one insurer.

As a whole-of-market insurance broker, Black Lion Insurance provides specialised advice to address the protection needs of the self-employed, contractors, directors, and businesses.

For a no-obligation discussion, call Black Lion Insurance on 0203 011 00 22 or start the process of obtaining a quote online here.

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What our clients are saying

Black Lion insurance were great in helping me get through the countless jargon and pitfalls when it comes to setting up insurance. I was thankfully recommended to them by a colleague and they made the process seamless ensuring I have the most appropriate policy for me.

I’m an IT contractor and I wasn’t sure if I was eligible for this cover, however, to my delight, not only could I have the cover, but I could pay it through my Ltd company. I was covered within an hour of getting in contact. Very prompt and informative service!
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Polite and very clear when explaining my product of interest. Happy to answer any questions and recap on areas that I wanted to ensure I understood clearly before committing. Didn’t feel pressured or rushed at any point and the chap was very pleasant.
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About Us

Part of Halo Consulting, Black Lion Insurance are a dedicated team of insurance consultants with years of experience in guiding our clients to a solution that meets their specific needs. We specialise in helping both employed and self employed individuals, as well as business owners on a variety of solutions, which range from life insurance, income protection insurance, keyman insurance and shareholder protection insurance.