Health insurance that actually protects you.

Income Protection

Income protection is, in our professional opinion, the single most important insurance product that most people do not have. It replaces a portion of your income - typically 50-70% of your gross earnings - if you are unable to work due to illness or injury. It pays out monthly, just like a salary, and continues paying until you recover, until the policy term ends, or until you reach retirement age.

Unlike critical illness cover, which pays a one-off lump sum for specific named conditions, income protection covers you for any illness or injury that stops you working. Break your back. Develop severe anxiety. Get chronic fatigue syndrome. Suffer a condition that is not on any critical illness list. It does not matter what the diagnosis is - if you cannot do your job, the policy pays.

How much does it pay?

Most policies will cover between 50% and 70% of your gross pre-tax income, depending on the insurer and how the benefit is calculated. Some insurers calculate the benefit based on your gross income minus the single person's personal tax allowance and national insurance. The payout is typically tax-free if you pay the premiums yourself (rather than your employer paying them), which means the actual take-home replacement rate is higher than it first appears.

For example, if you earn £50,000 per year, a policy might replace around £30,000-£35,000 per year, paid monthly. After tax on your normal salary, your actual take-home pay is perhaps £37,000. So the income protection benefit replaces a very substantial proportion of what actually hits your bank account - and it arrives tax-free.

Own occupation vs any occupation - the most important decision

This is the single most critical choice in income protection and the one that most people get wrong when buying online. Here is the difference:

Some policies also offer a middle ground called "activities of daily working" or similar wording, which pays out if you cannot perform a set of specified functional activities (like standing, sitting, lifting, or concentrating for a defined period). This is better than pure "any occupation" but still not as straightforward as own occupation.

Deferred periods - choosing the right waiting period

The deferred period (sometimes called the "waiting period" or "excess period") is how long you must be off work before the policy starts paying. Common options are:

The right deferred period depends on how long you could survive financially without any income. Think about your employer sick pay (contractual, not just statutory), your savings, your partner's income, and your fixed outgoings. A longer deferred period means a lower premium, so the trick is choosing the longest period you can safely afford to wait through. This is a trade-off between affordability and protection - and it is one of the key reasons we recommend speaking to an adviser rather than guessing online.

How it interacts with statutory sick pay and employer sick pay

If you are employed, you are legally entitled to Statutory Sick Pay (SSP) from your employer for up to 28 weeks. As of 2024/25, SSP is £116.75 per week - a figure that bears essentially no relationship to most people's actual living costs.

Many employers offer contractual sick pay on top of SSP - for example, full pay for 3 months, then half pay for 3 months. If you have generous employer sick pay, you can choose a longer deferred period to keep premiums down, because your employer is effectively covering the initial months.

If you are self-employed, you get nothing. No SSP. No employer sick pay. Your income stops the day you stop working. This makes income protection even more essential for the self-employed, and a shorter deferred period (4 or 8 weeks) is often the right choice, despite the higher premium.

Short-term vs long-term income protection

Long-term income protection is what we have been describing above. It pays out until you recover, until the policy term ends, or until you reach retirement age (typically 65 or 68). This is the proper, comprehensive version and the one we recommend.

Short-term income protection pays out for a limited period only - typically 12 or 24 months per claim. After that, the payments stop whether you have recovered or not. It is cheaper, but it leaves a significant gap: if you develop a long-term condition that keeps you off work for years, the benefit runs out and you are on your own.

Short-term cover has its place - it is better than nothing, and it can be a good bridge if long-term cover is genuinely unaffordable. But if you can stretch the budget to long-term, that is always the better choice.

Age-costed (guaranteed) vs reviewable premiums

Income protection premiums come in two flavours:

• Age-costed (guaranteed) - Your premium is calculated based on your age at the start, and it increases each year on a pre-set schedule that is guaranteed at outset. You know exactly what you will pay at every age. The premium starts lower when you are young and rises as you age, but the insurer cannot change the rate beyond the agreed schedule.
• Reviewable - The premium starts even lower, but the insurer can review and increase it at set intervals (typically every 5 years), based on the claims experience across their whole book of policyholders. This means your premium could increase significantly and unpredictably. In our experience, reviewable premiums almost always end up costing more over the lifetime of the policy than age-costed premiums.

For most people, we recommend age-costed premiums. You get certainty, and you can budget for the gradual increases. Reviewable premiums look cheaper on day one but can become unaffordable at the worst possible time - when you are older and more likely to need the cover.

Indexation - protecting against inflation

Indexation (sometimes called "index linking" or "escalation") means your benefit amount increases each year, typically in line with the Retail Price Index (RPI) or at a fixed percentage (often 3% or 5%). Your premium increases to match.

Without indexation, a £2,000 per month benefit that seems adequate today could feel very thin in 20 years' time thanks to inflation. If you are taking out a long-term policy, indexation is strongly recommended. You can usually decline the annual increase in any given year if you need to keep costs down.

Why you cannot set this up properly online

This is not a sales pitch. Income protection is genuinely complex, and the decisions you make at the point of purchase determine whether the policy actually pays out when you need it. The variables include:

• Own occupation vs any occupation vs activities of daily working (and some insurers only offer own occupation for certain professions)
• The correct deferred period based on your employer sick pay, savings, and fixed costs
• Benefit amount calculation (different insurers calculate the maximum differently)
• Age-costed vs reviewable premiums and the long-term cost implications
• Whether to include indexation and at what rate
• Short-term vs long-term and the real-world implications of that choice
• Which insurer offers own occupation for your specific job title (not all do for every occupation)
• How any existing medical conditions affect which insurer to approach and what terms to expect

Get any one of these wrong and you could end up with a policy that either does not pay when you need it, costs more than it should, or both. A comparison site cannot walk you through these decisions. A five-minute call can.

Income protection and trusts

Income protection policies do not generally need to be placed in trust. The benefit is paid directly to you while you are alive and unable to work - it is replacing your income, not providing a lump sum to your estate. This is different from life insurance or critical illness cover, where trust planning is essential. However, if your income protection policy includes a "death in service" or lump sum death benefit, that element may benefit from being placed in trust.

Private Medical Insurance (PMI)

Private medical insurance covers the cost of private healthcare treatment in the UK. It is not a replacement for the NHS - you still have full access to the NHS regardless - but it gives you the option of being seen faster, choosing your own consultant, and being treated in a private hospital when you need it most.

Why people buy PMI - the waiting list reality

The NHS is under enormous pressure. As of recent figures, over 7.5 million people are on NHS waiting lists in England alone, with many waiting over 18 weeks for treatment. For some specialities, the wait can stretch to 12 months or beyond. If you need an MRI, a consultation with a specialist, or a non-emergency operation, the wait can be substantial.

With PMI, the typical journey looks very different: GP referral, then a private consultation within days, diagnostics (scans, blood work) within a week or two, and treatment or surgery scheduled promptly thereafter. For many conditions, the difference between NHS and private timelines can be the difference between months of pain and uncertainty versus a swift resolution.

What PMI covers

• Diagnostics - MRI scans, CT scans, blood tests, biopsies, and specialist consultations
• In-patient and day-patient surgery - Operations that require a hospital stay or day admission
• Cancer treatment - Chemotherapy, radiotherapy, and associated care (often with very comprehensive cover on higher-tier plans)
• Out-patient treatment - Follow-up appointments, physiotherapy, and ongoing specialist care
• Mental health treatment - Many plans now include psychiatric and psychological treatment (often with annual limits)

What PMI does not cover

PMI is not a catch-all. Important exclusions to understand:

• GP visits - Your GP remains NHS. Some plans offer GP access add-ons, but it is not standard.
• Accident & Emergency - A&E is always NHS. PMI kicks in after the emergency for follow-up treatment and rehabilitation.
• Pre-existing conditions (under moratorium underwriting) - Conditions you had before the policy starts are excluded initially. More on this below.
• Chronic condition management - Most plans cover acute episodes but not ongoing management of long-term conditions like diabetes or COPD.
• Cosmetic surgery - Unless medically necessary (e.g., reconstructive surgery after an accident).
• Pregnancy and routine maternity - Standard pregnancy is not typically covered, though complications may be.

Moratorium vs full medical underwriting

When you take out PMI, there are two main approaches to how pre-existing conditions are handled:

For most people, full medical underwriting gives better long-term outcomes because you get clarity upfront. Moratorium underwriting is faster but can lead to unpleasant surprises at claim time.

Excess options

Like car insurance, PMI policies offer excess options. A higher excess (the amount you pay towards each claim before the insurer covers the rest) means a lower premium. Common excess levels are £0, £100, £250, £500, and £1,000. Some policies offer a "hospital list only" or NHS excess option, where you agree to use NHS services for out-patient treatment and only use private facilities for in-patient care, which can reduce premiums significantly.

Corporate vs individual PMI

If your employer offers PMI as a workplace benefit, it is usually cheaper than buying individually because the risk is spread across a group. Corporate schemes also typically come with full medical underwriting by default and may include dependants. If you leave the employer, most insurers offer a "continuation option" allowing you to switch to an individual policy without re-underwriting - though the premium will increase. If you have corporate PMI, check exactly what it covers before buying additional individual cover.

Health Cash Plans

Health cash plans are the most affordable tier of health cover. They work differently from PMI: instead of paying for private hospital treatment, they reimburse you a set amount towards everyday healthcare costs that you already pay for. Think of them as a cashback scheme for routine health spending.

What they typically cover

• Dental treatment - Check-ups, fillings, crowns, and hygienist visits, up to an annual limit
• Optical - Eye tests, glasses, and contact lenses
• Physiotherapy and osteopathy - A set number of sessions per year
• Chiropody and podiatry
• Health screenings - Some plans include or contribute towards annual health checks

How they differ from PMI

Health cash plans are not a substitute for private medical insurance. They do not cover hospital stays, surgery, or specialist treatment. They cover the small, regular costs that most people pay out of pocket anyway. PMI is for the big things you hope never happen. Cash plans are for the routine things that happen to everyone.

Who are they for?

Cash plans work well for people who regularly visit the dentist and optician and want to offset those costs. They are also popular as employee benefits - they are cheap for employers to provide and employees genuinely use them. Premiums start from as little as a few pounds per month, making them accessible for almost any budget. They can sit alongside PMI as a complementary product, or stand alone for people who cannot afford or do not need full PMI.

Critical Illness vs Income Protection vs PMI

These three products are often confused. They protect against completely different things. Here is how they compare:

Key Person Insurance

Key person insurance (sometimes called "key man insurance") protects a business against the financial impact of losing a critical individual - whether through death or critical illness. The policy is owned by and pays out to the business, not the individual.

The payout can cover the cost of finding and training a replacement, lost revenue during the transition, or simply keeping the business afloat during a difficult period. It is particularly important for small businesses and partnerships where the loss of one person could genuinely threaten the company's survival.

Premiums are typically paid by the company and may be treated as an allowable business expense for corporation tax purposes (for death cover; the treatment of critical illness cover is more nuanced). We always recommend taking tax advice alongside setting up key person cover.

Shareholder Protection

If you co-own a business, shareholder protection ensures that the remaining shareholders can buy out the shares of a shareholder who dies or becomes critically ill. Without it, those shares could pass to the deceased's family - who may have no interest in or knowledge of running the business, but who now own a stake in it.

The mechanism works through a cross-option agreement (sometimes called a "double option agreement"). Each shareholder takes out a policy on themselves. If they die or become critically ill, the policy pays out, and the cross-option agreement gives the remaining shareholders the option to buy the shares at a pre-agreed value, and gives the deceased's estate the option to sell. Neither side is forced to act, but both have the option - which is important for ensuring the arrangement works from both a legal and tax perspective.

Shareholder protection policies should be written using a business trust to ensure the proceeds are used correctly and to provide tax efficiency. This is specialised work and should be set up with proper advice.

Business Loan Protection

If your business has borrowed money - a commercial mortgage, a business loan, or any form of business debt - and you have provided a personal guarantee, business loan protection ensures that the debt can be repaid if you die or become critically ill. Without it, the debt falls on your estate or your family.

The policy is typically set up as a decreasing term policy (matching a reducing loan balance) or a level term policy (for interest-only or revolving facilities). The sum assured should match the outstanding debt, and the term should match the loan repayment period. Like key person insurance, the premiums may be allowable for corporation tax, but the tax treatment depends on the specific circumstances.