Why income protection is more than just a safety net

At a glance

  • Income protection offers the peace of mind that your home, family and lifestyle aren’t affected if you’re unable to work because of illness or injury.
  • Proper income protection also means you won’t be using tomorrow’s money to cover today’s expenses – so you protect your savings and stay on track for the future.
  • Loss of earnings due to illness isn’t uncommon, so it’s worth talking to a financial adviser to see how income protection can help protect the financial wellbeing of your family.

Is it worth getting income protection?

Income protection insurance pays a regular monthly amount if you can’t work because you’re unwell, or suffer an injury that results in a loss of earnings. Knowing that, if you suddenly couldn’t work, the mortgage and bills would still be paid, can take a real weight off your shoulders, and mean you don’t need to put your future plans on hold.

Many of the workforce would receive some sick pay benefit from their employer. But for the UK’s 4 million self-employed workers,1 protecting their family, home and lifestyle if they can’t work could mean dipping into their long-term savings to keep afloat. An income protection plan isn’t just a safety net for the immediate expenses, it also protects your savings and investments.

Taking out income protection insurance might mean you don’t need to put money aside in an emergency cash fund as well – so you could choose to invest that money instead in your pension, or into a Junior ISA for the children.

How income protection protects your future, as well as your present

Long-term serious conditions can force you into some difficult decisions. Without an income protection plan in place, a sudden loss of your wages could have far-reaching effects on your financial stability in the future. You may have to choose between paying the electricity bill, or school fees, or making your regular contributions to your pension and investments.

What do income protection policies cover?

In the past three years, 8% of workers had two months or more off work due to physical illness, injury, and 6% had more than eight weeks off due to a mental-health event, according to a report by insurer LV=.2 Almost half said they’d fall back on savings to get them through a period off work, yet 4 in 10 said they had less than three months average household outgoings in their accounts.

Income protection will cover between 50% – 75%% of your monthly wage if you can’t work, according to Unbiased3 , acting as a replacement salary to help cover your outgoings. This means you can keep more of your savings and investments intact, so they can continue to earn interest or returns.

Money issues and mental health are closely linked. Almost one in five (18%) people with mental health problems are in problem debt according to Money and Mental Health4 Income protection will pay out for claims related to mental-health issues, so the weight of money worries is lifted from the shoulders of those recovering.

In the past five years, Aviva, one of the UK’s largest income-protection providers, paid out £5.37 billion in individual protection claims,– and 24% of claims related to a mental-health condition in 2023, the second most common reason.

Why do I need income protection if I have sick pay?

Many of us take it for granted that our employer would pay us if we had to take time off due to illness or injury. A report by the Association of Mortgage Intermediaries found that, on average, we think we could receive £123 per week statutory sick pay, with those aged 18 to 34 estimating £153 per week. In reality, it pays just £99.35 a week.6

Many self-employed people will receive nothing at all – something else the report found was not well known – and would need to rely on savings, or a partner’s income.

Only 6% of the working population have income protection.7 But, unsurprisingly, more than one in four of those who don’t would like to have it.6

How do I choose an income protection policy?

It can be tricky to work out which type of protection – and amount of cover – you need.

A financial adviser can talk you through the differences between policies and check to see whether income-protection payments might affect your ability to claim state benefits – or if pre-existing conditions might affect a claim, or your eligibility for insurance.

Taking financial advice on income protection

Income protection keeps you afloat in the short-term – and on course for the long-term. To find the right income protection insurance for you , get in touch with us. You’ll be protecting the financial wellbeing of the whole family.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

The favourable tax treatment of ISAs may not be maintained in the future and is subject to changes in legislation.


1Ipse, the self-employed landscape in 2023, accessed April 2024

2Reaching Resilience: The Role of Protection in Building Financial Resilience, LV=, January 2023 (From a survey of 4,000 nationally representative UK adults)

3Unbiased, February 2024, accessed April 2024

4Money and Mental Health Policy Institute, accessed April 2024

Individual Protection Claims Report 2023, Aviva, May 2023 (Based on 50,600 claims)

6 The Great Protection Shift, Association of Mortgage Intermediaries, November 2022 (From a survey of 3,000 UK adults)

7Financial Conduct Authority Financial Lives Survey (2022)

SJP Approved 07/05/2024