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How much does income protection insurance cost in the UK?

If you’re considering an income protection policy, you’re probably wondering how much it will cost and what will affect your premium.

We explore what you need to know before taking out a policy.  

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What is income protection insurance?

Income protection insurance provides a replacement salary when you cannot work due to illness or disability.

Unlike critical illness insurance, which comes as a lump sum, income protection insurance pays around 50% to 75% of your income, usually every month, for the length of your coverage. 

This could be a short-term policy, for approximately one to five years, or long-term, continuing until you can work again or reach retirement age.  

Some income protection policies cover you not just if you can’t work but if you can’t work in your role.

This can be especially helpful to those in specialist industries, but it can be more expensive.

Learn more: income protection vs critical illness, what's the difference?

What affects the cost of income protection insurance?

  • Your job: Should you plan to cover your income if you can no longer work in your current role or field, your premium will be higher than it would be if you were only covering not being able to work. Your premium will be higher if your job involves dangerous conditions. 

  • The length of your policy: Short-term policies are cheaper than long-term ones, as the latter usually provides more coverage. 

  • The length of your deferred period: Your deferred period is the time between when you can’t work and when you start to receive your replacement income. The longer you can make this period, the cheaper your premium will be. 

  • Your age: The older you are, the more you’ll pay. As with health insurance, the risk of illness and the chance of needing to claim increases with age. 

  • Your health: The healthier you are, the less you’ll usually pay. As with health insurance, the risk of illness and the chance of needing to claim decreases with better health. 

  • Your hobbies and lifestyle: Any risky hobbies or lifestyle factors can increase costs.  

How much does income protection cost?

Narrowing down the cost of income protection insurance isn’t easy.

What you pay is affected by many factors, from the level of coverage to your health and lifestyle. 

The average cost of income protection could be anywhere from as little as £10 a month, but this depends on many factors.  

So, for example: 

  • The impact of age: At 25, the average monthly premium for a monthly income of £1,500 would be £8.77, according to LifeSearch. By 55, this would rise to an average of £34.02. 

  • Expensive occupations: At 25, an office job might offer a premium of around £24.05, compared to a manual role with a premium of £44.63. 

  • The length of cover: At 25, short-term income protection may cost an average of £6.14 a month, while long-term income protection covering the next 45 years is around £8.27.  

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Finding the best income protection policy

Finding the best income protection policy involves some research to make sure you choose the right one for you.

Alternatively, an insurance broker may be able to help you find the best policy.  

Once you’ve determined what type of policy you’re looking for and figured out average costs, it might be worth considering a reputable firm.  

Below are a few of the highest-rated income insurance providers and the average payout rate.  

  • British Friendly Society (Trustpilot rating of 4.2/5 based on over 200 reviews, 90% payout rate in 2022)  

  • LV= (Trustpilot rating of 4.5/5 based on over 67,000 reviews, 92% payout rate in 2022) 

  • Shepherds Friendly Society (Trustpilot rating of 4.2/5 based on over 600 reviews, 96.2% payout rate in 2022) 

  • Wesleyan Assurance Society (Trustpilot rating of 4.8/5 based on around 1,700 reviews, 98% payout rate in 2022) 

Every company has its own deferral and benefit period options, as well as its maximum income percentages, so it’s worth shopping around and considering what will best suit you. 

When you’re looking for affordable income protection cover: 

  • Ensure you act as soon as possible, as the cost will only increase with age.  

  • Check whether the policy covers you for temporary and permanent disability, as well as terminal illness. 

  • Confirm whether your provider and policy will cover any pre-existing conditions. 

  • Look at getting a policy with a guaranteed premium. 

Learn more: the benefits of using an insurance broker

Is income protection insurance worth it?

The Financial Conduct Authority’s Financial Lives Survey (2022) found that only around 6% of people in the UK have income protection insurance.

Only you can determine whether this insurance is worth the monthly expense. 

If you’re struggling to make a decision and need advice on insurance, Unbiased can connect you with an insurance broker.  

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We’ll find a professional perfectly matched to your needs. Getting started is easy, fast and free.

About the author
Our team of writers, who have decades of experience writing about personal finance, including investing, retirement and pensions, are here to help you find out what you must know about life’s biggest financial decisions.