How much income protection do I need?

How much income protection insurance you need will depend on your personal circumstances.

When taking out income protection, it’s more a case of ‘how much cover can I take out?’ This is because the level of cover you can secure will be based on your earnings.

Up to 70% of your income could be paid out in monthly, tax-free payments to mimic your monthly pay cheque.

However, it’s important to make sure that this amount is sufficient to cover all that you need it to.

To do this, you should be aware of your monthly financial commitments and whether you have any other sources of income available to you.

Income protection insurance can help you to cover:

  • Rent or mortgage payments
  • Household bills and utilities (gas, electricity, water, council tax)
  • Living costs (such as the weekly food shop)
  • Transport (petrol, taxis, bus/train fare)
  • Childcare costs
  • Loan and/or credit card payments (such as car finance)
  • Leisure costs

Why not use our handy income protection insurance calculator (below) to input your monthly expenses and work out how much cover you might need?

How much income protection insurance do you need?

Enter the fields which apply to you to calculate the level of income protection cover you might require to help cover key costs.

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£723 a month is the average monthly mortgage payment in the UK, with the average monthly rental price coming in at £700.

The majority of our monthly income will go towards rental or mortgage payments.

For this reason, it’s essential to have precautions in place to ensure you could keep up to date with your payments if you weren’t receiving your usual income.

Monthly income protection payments can help to cover this large expense and ensure you can stay in your home.
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According to the Money Advice Service, the average household spends £340 a month on household bills.

This includes electricity, gas, TV and broadband.
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Childcare costs are on the rise with it now costing £137.69 per week for part-time nursery for a child under the age of two.

That’s over £550 per month - is this an amount you’d be able to keep up with if you were unable to work?

Becoming ill could also result in the need for additional childcare while you attend doctors’ appointments or medical treatment.
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The average household in the UK spends around £97 a week on their food shop, totaling £388 a month.

While this may seem like a small amount in comparison to some of the other expenses mentioned, the food shop is often where we try to scrimp and save when we fall on hard times.

Income protection can take care of the cost of your weekly food shop, as well as many other essential costs.
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At the beginning of 2020, credit card debt in the UK was at £2.1 billion, with almost 27 million UK residents in some kind of debt.

Becoming unable to work could make it hard to keep up with credit card or loan payments (including car finance or other financed goods).

Failure to keep up with payments could result in additional interest being incurred or late fees issues - resulting in a higher total needing to be paid.
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The average spent on public transport each month comes to an average of £94.

This includes the cost of public transport, as well as petrol and diesel vehicles.

While this amount may reduce while you’re unable to work as you won’t need to commute there may be additional spending on public transportation if your illness or injury leaves you unable to drive.
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Your total cover estimate

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Let us find you our best quotes.

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Alternatively, why not use the FCA-regulated service of Reassured to help you determine the best income protection solution to meet your needs?

Income protection starts from just 20p-a-day ‡ , get in touch for your free quotes.

Keep reading this in-depth guide to find out more about income protection and how providers calculate the cost of your cover…

What is income protection insurance?

Income protection is an insurance policy that will pay out a percentage of your income if you’re unable to work due to sickness or injury.

Benefit Amount

Up to 70% of your usual income could be protected.
Definition of Incapacity

If you develop an illness or injury that prevents you from working, you can make a claim.
Income protection

You can receive monthly, tax-free, payments until you’re well enough to return to work.
Peace of mind

Providing you with peace of mind that you can keep up with monthly financial commitments while you’re unable to earn your usual income.
Compare Income Protection Insurance »

How much income protection can I take out?

How much income protection you can take out will depend on two factors:

  1. Your income
  2. How much your chosen provider will pay out

Income protection providers won’t pay out your full income, instead they will pay out a percentage of your usual earnings.

Most commonly, this can range from 50% to 70% (the percentage paid out can vary between providers so it’s important to compare multiple quotes).

For example, if your usual income (before tax) is £30,000 and your policy pays out at 70%, you could receive £1,750 a month.

If you were off work for 24 months, and your policy covered this entire period, you could receive £42,000 in payments overall.

Providers will also need to know of any other sources of income you have when determining the level of cover you can take out, such as:

  • A second income (from a second job)
  • State benefits
  • Shareholder dividends


Reassured Advice can help you to compare quotes from the whole of the market to find you the most suitable policy. Simply get in touch for your free quotes.

Compare Income Protection Insurance Quotes »

How is the cost of income protection calculated?

The price you pay for income protection insurance will be based on the level of risk you pose to the provider.

Providers will assess your level of risk using key information that you’ll need to give during the application process.

This information can be broken down into two categories:

  1. Personal factors »
  2. Policy factors »

Keep reading as we break down these factors…

Personal factors

Personal factors are factors that are unique to you and will depend on your individual circumstances.

Personal factors can include:

Let’s explore which personal factors income protection providers use to calculate the cost of your cover…

Age

You’ll need to provide your age and date of birth during the application process.

In most cases, the older you are, the more you’ll pay for your premiums.

This is because insurers perceive you to be a greater risk due to the increased likelihood of developing health complications (which will make a claim more likely).

Taking out cover at a young age can help you to lock-in the most affordable premium throughout the lifetime of your policy.

Seize the day and compare quotes through Reassured today to secure the most affordable income protection insurance to meet your needs.

Health and wellbeing

If you have any pre-existing medical conditions, these will be taken into consideration during the application process.

The type and severity of your condition could mean your premiums are loaded (or inflated) to compensate for the greater risk.

Those with mild conditions, that have a minimal effect on day-to-day life, are likely to experience only a small loading (or perhaps no loading at all) to their premiums.

Those with more severe conditions may experience a greater increase to their premiums.

It’s also likely that your condition (and any related conditions) will be added as an exclusion to your policy, this means you won’t be able to make a claim for this reason.

In rare cases, if you have extremely poor health, insurers may deem you too high risk and may not be able to offer you cover.

However, even if you’ve previously been declined, all is not lost.

Reassured's advised team work with the UK's leading providers as well as smaller specialists to help you secure the cover you need. Simply get in touch.

Smoking status

You’ll need to declare whether you smoke during the application process.

If you declare that you are a smoker you may need to undergo some additional questions so that providers can find out more information about your smoking habits.

This could include:

  • How long you’ve smoked for
  • How many cigarettes you smoke per day
  • Whether you’ve developed any health conditions as a result of smoking

Not all providers will charge smokers more for their cover, but it’s likely that you'll experience higher premiums due to the increased risk of developing certain health complications.

It’s important to be open and honest about your smoking habits during the application process. Failure to do so is known as non-disclosure (which is a form of insurance fraud) and this can prevent a pay out being made when you need it.

It’s still possible to secure affordable income protection as a smoker, why not let Reassured find you the most cost-effective policy?

Occupational risk

Your occupation can play a big part when providers assess your level of risk.

Most providers categorise occupations into class groups which are based on risk, the class group your occupation falls into can help to determine the price you pay for your cover and the terms you’re offered.

Typically, the riskier the occupation, the more you’ll pay for your premium.

For example, someone with an admin job based in an office will likely be in a lower class risk group and, therefore, will pay less than someone in the construction industry.

It’s worth noting that class groups can vary significantly between providers and some providers may not split occupations into class groups at all.

This is why it’s important to shop around and compare multiple quotes. Why not let Reassured Advice help you do this with their whole of market comparison service?

Compare Income Protection Insurance Quotes »

Policy factors

As well as the personal factors mentioned above, there are certain policy factors that providers will consider when calculating the cost of your income protection policy.

These factors include:

Let’s explore these policy factors in more detail to find out what providers take into account when calculating the cost of income protection…

Policy length

As with most insurance policies, the longer the policy term, the more you’ll pay for your cover.

However, it’s important you choose a policy length that will meet your needs.

There’s often an upper age limit by which cover must cease (this is usually around 59/60 but can vary between providers), you may wish to have your policy reach this maximum time to ensure you’re covered for the rest of your working life.

Compare income protection through Reassured to find the most suitable policy.

Definition of incapacity

In terms of income protection, the definition of incapacity is what makes you eligible to make a claim.

There are three common definitions of incapacity:

  1. Own occupation - This provides the most comprehensive cover as you’ll be able to claim if you’re unable to do your specific job
  2. Suited tasks - This offers a middle level of cover. if you’re unable to do your own job, you may be asked to carry out a different job that is suited to your skills and experience. You’ll be able to claim if you’re unable to do either
  3. Any tasks - This is the least comprehensive option. You’ll only be able to claim if you’re unable to work in any job and, often, you must be unable to complete a list of simple daily tasks (such as writing your name) in order to claim

As an own occupation definition offers the greatest level of cover, you tend to pay more for your premiums.

However, you benefit from knowing that you’ll be able to claim if you’re unable to fulfil your own job and you won’t be asked to undergo any other job role.

Payment period

The payment period is how long you’ll receive payments for after each successful claim.

Payment periods can be:

  • Short-term - Payment period lasts up to 1 - 2 years
  • Long-term - Payment period could last up until retirement

Whether you choose short-term or long-term cover could have a big impact on the price you pay for your cover.

Short-term cover will only pay out to you for a maximum of 2 years, meaning you may fall short if you’re unable to work for longer than this.

However, with long term cover you have a flexibility to choose a much longer payment period that meets your needs.

This could be up until you reach retirement, providing cover for your whole working life if you were incapacitated and unable to work again.

The table below shows the price comparison between short-term and long-term income protection.

Quotes are based on a non-smoker, in good health, with an annual income of £30,000. Cover is up to age 65 with a 3 month deferred period, with a maximum benefit amount:

AgeShort-term income protectionLong-term income protection
20£5.85
(1 year payment period)		£8.27
(45 year payment period)
25£6.14
(1 year payment period)		£10.17
(40 year payment period)
30£6.41
(1 year payment period)		£12.04
(35 year payment period)
35£6.88
(1 year payment period)		£14.98
(30 year payment period)
40£8.60
(1 year payment period)		£19.56
(25 year payment period)
45£11.00
(1 year payment period)		£28.94
(20 year payment period)
50£14.63
(1 year payment period)		£43.74
(15 year payment period)


Reassured Advice can help you to compare both short-term and long-term income protection, allowing you to find the most suitable option.

Deferred period

The deferred period refers to the period of time which must pass before your payments can commence.

You must still be unable to work after this time has passed in order to receive your income protection payments.

As a general rule, the longer the deferred period, the cheaper the cost of your cover.

Deferred periods can vary between providers but most commonly they can be as short as 4 weeks up until 52 weeks.

You may wish to find out the full entitlement of your sick pay (if you receive this benefit) so you can line up your payments with when your sick pay finishes.

Some providers offer a deferred period which will pay out after just a couple of days, this is known as a ‘back-to-day-one’ deferred period and this can be beneficial for those who are self-employed to help maintain your earnings as soon as possible.

We have written a dedicated income protection for self-employed workers article if you require more information »

Premium type

There are a range of premium payment options to choose from, which option you choose (along with the other factors mentioned) will influence the amount you pay for your premium.

You can choose between:

Reviewable premiums - These are premiums that the insurer has the right to change throughout the lifetime of your policy. These changes can be based on various factors, including increasing in age or risk.

With this premium option, you could end up paying more each month than you originally intended.

Age banded premiums - your premiums will increase each year as you get older at a set rate. Although your premiums are guaranteed to go up in price each year, you often won’t be penalised for smoking or for having a risky occupation.

Guaranteed premiums - These are premiums that remain the same throughout the lifetime of your policy, meaning you’ll never pay more than was initially agreed.

Reassured Advice can provide income protection with reviewable, age banded and guaranteed premiums to ensure you find a policy with the right terms to meet your needs at a price within your budget.

What’s the average cost of income protection insurance?

Income protection through Reassured Advice starts from just £5-a-month.

However, the price you pay for income protection will vary between person to person.

This is because insurers will take key information (detailed above) into consideration to calculate your monthly premium.

The table below shows example prices for an income protection policy. Quotes are based on a non-smoker, in good health, with an annual income of £30,000.

Cover is up to age 65 with a 3 month deferred period, with a maximum benefit amount:

AgePrice per monthMonthly benefitDefinition of incapacityPayment periodPremium payment type
20£5.85£1,625Own occupation1 yearReviewable
(age-banded)
25£6.14£1,625Own occupation1 yearReviewable
(age-banded)
30£6.41£1,625Own occupation1 yearReviewable
(age-banded)
35£6.88£1,625Own occupation1 yearReviewable
(age-banded)
40£8.60£1,625Own occupation1 yearReviewable
(age-banded)
45£11.00£1,625Own occupation1 yearReviewable
(age-banded)
50£14.63£1,625Own occupation1 yearReviewable
(age-banded)


Reassured Advice can help you to compare both short-term and long-term income protection, allowing you to find the best policy to meet your needs (and at the right price for your budget).

How long does income protection insurance pay out for?

An income protection policy will pay out to you until one of the following happens (whichever happens first):

  • You recover and can return to work
  • The payment period stated in your policy comes to an end
  • Your policy comes to the end of its term and cover expires
  • You retire
  • You pass away

It’s possible for you to make multiple claims during the term of an income protection policy, but a claim period must have ended before another claim can be made.

Some providers will need you to have returned to work for a certain amount of time before another claim can be made.

Compare income protection quotes

Not only can quotes vary significantly due to your personal circumstances, they also vary between providers due to the different underwriting processes used.

For this reason, it’s essential to compare quotes to find the best available deal.

What’s more, letting a broker (like Reassured) help you do this allows you to compare quotes from all the UK’s best income protection providers (as well as smaller specialists).

So why not let Reassured help you secure a policy that meets all your needs?

Quotes are no-obligation, fee-free and start from just 20p-a-day.

Simply get in touch with a friendly member of the team today.

Compare Income Protection Quotes »

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