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Is income protection worth it?

✅ Fact checked by Tembo protection specialist

Anya Gair
Last Updated 19 March 2024

Income protection is a type of insurance that pays you a regular, tax-free income if you can’t work due to illness or injury. You might have been told you need it if you’ve recently bought your first home, or gone through a major life change like starting a family. But do you actually need it and is it worth it? Keep reading to find out.

In this guide

What does income protection cover?

Income protection is an insurance policy that covers you if you cannot work due to sickness, injury or disability. When you make a claim, your insurer pays you a regular income until you return to work or retire, or for a fixed period such as 1-2 years. This can help cover your essential living costs such as your mortgage or rent and bills, reducing the financial strain on you and your family until you can go back to work or go into retirement.

Can you get 100% income protection?

No, you cannot get 100% income protection. Typically, income protection insurance will cover a set percentage of your existing gross annual salary, which is normally between 50-70% of your income.

Does income protection actually pay out?

Income protection does pay out most of the time - in fact, 98% of claims are paid out

The average payout from life insurance, income protection and critical illness claims in 2022 was £15,448, increasing for the third year in a row. In over half of declined claims, the reason the claim was denied is because the customers had not told their insurer key details about themselves or their circumstances when they took out the policy.    

This is why it’s important to know exactly what is and is not covered in your policy to ensure you can claim on your insurance, as well as be completely honest when setting up your cover. For example, income protection doesn’t cover redundancy or if you’ve been sacked from a job. To cover these situations, you’ll need a different type of coverage such as unemployment cover.

"It's a common belief that insurance providers never pay out on claims, but this simply isn't true. For example, in 2022 Aviva paid out on 98% of all their individual protection claims, equivalent to more than £2.9m being paid out every day."


Joe Martin

Protection and Insurance Lead at Tembo

Why is income protection so expensive?

The cost of income protection varies from person to person depending on their circumstances, but can cost as little as £10 per month*. The monthly premium you’ll be charged is impacted by factors like your age, your health and job type (those in risky or physically demanding jobs will pay more for cover). It all comes down to how risky you are deemed by the insurance company based on these factors, and how likely you are of making a claim.

Do I need income protection insurance?

You might think only those in physically demanding or dangerous jobs are the ones who need income protection because they are most at risk of injury. But the biggest claim for income protection in 2022 was for neck and back pain. Those in ‘professional’ jobs make up the highest percentage of UK workers and sit at a desk for 4-9 hours each day - that’s the same as 67 days of being sedentary each year. It’s a well-known fact that sitting down for long periods is bad for your health, but you might not have thought how this could lead to you being unable to work.

Another thing to consider is if you could cover your essential costs if you were unable to work. With the cost of living crisis continuing to squeeze budgets, it may seem counterintuitive to pay for cover each month. But income protection and other types of cover can be a life saver if you find yourself unable to do your job. One in three people don't have enough cash for emergencies, which would make it difficult to pay bills, rent or mortgage payments without an income coming in. 

Would you be able to cover your normal monthly costs like rent or bills if you lost your earnings? How about for two months, or longer? Taking this into consideration, it’s easy to see how income protection can be a worthwhile investment for protection when you most need it.

Is income protection insurance worth it?

Whether income protection is worth it depends on your circumstances, like how likely you are to experience illness or injury which would prevent you from working. Another thing to consider is if you can cover your monthly costs if you are unable to work. When you are struggling with illness or recovering from a serious injury, the last thing you want is to be worrying about covering essential costs like bills.

Our award-winning, in-house team of protection and insurance experts can help you work out if income protection is worth it for you, and the best policy for you and your family.

What is the alternative to income protection?

There are a couple of alternatives to income protection you can consider. Mortgage protection covers your mortgage payments if you can no longer afford them, normally due to illness, a serious injury, or redundancy. While critical illness cover provides you with a lump sum if you are diagnosed with certain illnesses and life insurance provides your loved ones with financial support if you were to pass away unexpectedly. You can choose one of these policies, or choose a combined policy that provides the benefits of two types of coverage.

Unsure what policy to choose? Get advice from the experts

Our in-house team of award-winning protection and insurance experts can help you work out the best policy for you and your family.

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*Prices are based on the below criteria, as of 08/06/2023. Prices quoted may vary depending on your own individual circumstances including age, medical history, the sum assured, length of policy - and other variables.

Income Protection Insurance from £10 per month:
25 year old male client - non-smoker- administrator - 3-month deferment period- £1,500 to be paid out each month for a maximum of two years per individual claim- covering him up to the age of 65- £9.85 pm