A Beginner’s Guide to Income Protection

When you’re paying for a mortgage, or renting, you should consider how you’d pay for things if you became ill or had an accident.

This article will explore what income protection insurance is, how it works and the benefits of having it.

What is income protection?

Income protection insurance pays out a chunk or all of your regular income. This is in the event of a sickness, disability, or long-term illness that interferes with your ability to work.

Understanding how income protection works

Understanding income protection can be difficult and you may be thinking, how much income protection do I need? We’re here to help.

In the event of an accident or illness, income protection will provide regular payments that replace a portion of your income.

Depending on the policy you choose, the insurance will pay out until you return to work. If you are unable to return to work, it will cover you until you retire, die, or reach the end of your policy.

Again, it depends on the policy, but most income protection policies will cover the majority of illnesses that prevent you from working, whether they are long-term or short-term.

Most policies will pay up to 65 percent of your income if you are unable to work. For example, if your monthly salary is £1,300, you could receive £845 while you are ill and unable to work. 

In most cases, there is no limit to the number of times you can claim while you are still covered by your policy; however, you must ensure that you understand the specifics of your policy.

Some policies require you to wait a certain amount of time before receiving payments, which is known as the “pre-agreed waiting” or “deferred” period. The most common wait times are four, thirteen, and twenty-six weeks, or a year. The longer you wait, the lower your monthly payments are likely to be.

Is it worth getting income protection?

The worth of income protection is entirely dependent on your individual circumstances. 

For example, you may not require it if your company has a great sickness policy, which means they can provide you with a steady income for a year or more. Or, if you have a substantial amount of savings that you can use to support yourself if you become ill.

On the other hand, you may want income protection as a backup or a “just in case” situation.

The benefits of having income protection

It’s natural to want to know the benefits of income in order to determine whether it’s worthwhile in your specific situation. 

However, the main advantage is that sickness, accidents, and other events can happen to anyone, regardless of age. When purchasing (or renting) a home, you must be prepared to cover the costs, regardless of your financial situation. 

Income protection covers your various outgoings, such as childcare costs, household bills, mortgage or rent, loans, and so on. 

Income protection ensures that you have enough money to maintain your current lifestyle while you are healthy, regardless of the circumstances.

Closing thoughts

Understanding the complexities of income protection and whether you need it can be daunting.

Here at Sett, we can help you navigate the insurance options available to you when purchasing a home, and make it an easy and simple process. Contact us today to learn more about how we can help.


  • Elliott Benson

    Meet Elliott, a seasoned mortgage broker with over nine years of experience in property, and the founder of Sett Mortgages. With a background as a sales negotiator and mortgage services manager, he is a trusted professional with extensive knowledge in all things mortgages. Elliott's empathetic approach and clear communication style make him an approachable expert, decoding the complexities of mortgages for clients from diverse backgrounds. He stays up-to-date with the latest trends and regulations, offering cutting-edge solutions tailored to clients' needs. Committed to their financial well-being, he guides them through the mortgage process, ensuring countless successful and satisfied clients. Elliott's passion extends beyond his practice; he's a prolific writer, sharing his knowledge and insights in industry publications and blogs. His mission is to empower others with the information they need to make sound financial decisions.

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