Income Protection Calculator
Calculate income protection cover needed and estimate monthly premiums by age and deferral period.
Source: MoneyHelper — Income protection
By Konstantin Iakovlev · Founder, Calks.uk
Last updated: · Verified against HMRC and GOV.UK 2026/27 rates
Monthly Benefit (if you can't work)
£2,000.00
60% of salary · Pays after 13 weeks
Annual Benefit
£24,000.00
Est. Monthly Premium
£52.50
Cover Duration
32 years
Total Premiums
£20,160.00
Premiums are indicative only. Actual costs depend on health, occupation, smoker status and provider. A longer deferred period reduces premiums significantly.
Disclaimer
This calculator is provided for informational purposes only and should not be considered as financial or tax advice. All calculations are performed locally in your browser — no personal data is collected or sent to our servers. Rates and thresholds are sourced from HMRC and GOV.UK and are updated for the current tax year. Always verify results with HMRC or consult a qualified professional before making financial decisions.
How It Works
Income protection insurance pays a regular monthly income if you are unable to work due to illness or injury. Policies typically cover 50-70% of your gross income (insurers cap this to prevent over-insurance). Unlike critical illness cover, income protection pays out for any condition that prevents you from working, not just specified illnesses.
The deferred period (waiting time before payments start) significantly affects the premium. A 4-week deferred period is most expensive, while a 6-month or 12-month deferral can halve the premium. Choose a deferred period that matches your employer's sick pay provision or your savings buffer.
UK income protection payouts are tax-free if you pay the premiums yourself. Policies can be set to pay until retirement age, a specific age, or for a fixed period (budget policies). Long-term policies that pay to retirement are more expensive but provide the most comprehensive protection.
What is income protection insurance? Monthly tax-free benefit paid if you can't work due to illness or injury. UK premium: typically £20-£60/month for £20,000-£30,000/year cover for a healthy 35-year-old non-smoker. Coverage typically 50-65% of gross salary (insurer caps to maintain incentive to return to work). Pays until: recovery (return to work), retirement, end of policy term, or death. Different from critical illness (lump sum on diagnosis) and life insurance (lump sum on death).
Deferred period — when payments start. Period between starting illness and first payment. Options: 1 month (cheapest premium); 3 months; 6 months; 12 months (cheapest premium). Match to employer sick pay: NHS gives 6 months full + 6 months half (so 12-month deferred fits); private sector typically 1-3 months SSP only. Self-employed: no employer sick pay, choose 1-3 month deferred. Shorter deferred = higher premium (multiple times higher for 1 month vs 12 month).
Statutory Sick Pay vs income protection. SSP 2026/27: £116.75/week (£506/month) for 28 weeks maximum. Far below most people's living costs. Eligibility: earn £123+/week, employee (not self-employed), aged 16-state pension age. NHS staff get enhanced (6 months full pay + 6 months half pay — best UK sick pay). Private sector varies wildly. Income protection fills the gap — many people only realise SSP is inadequate when illness strikes. Universal Credit + PIP available longer-term but means-tested and bureaucratic.
How insurers calculate premiums. Age: each year over 35 adds 8-12% premium. Smoker: 50-80% extra premium. BMI 30+: 20-50% extra. Occupation: office work (Class 1) cheapest; manual trades (Class 4) 2-4× premium. Hobbies: skiing, scuba diving, motorcycle — premium loading. Pre-existing conditions: exclusions or premium loading. Family history of specific conditions: usually only material if specific. Choose: own occupation (pays if you can't do YOUR job — most expensive) vs any occupation (must be unable to do ANY job — much cheaper but harder to claim).
How likely am I to claim income protection? ABI statistics: ~1 in 4 workers off work for 1+ months in working lifetime. Mental health and musculoskeletal (back pain, stress, depression): account for 60-70% of claims (NOT cancer/heart attacks which dominate critical illness claims). Claim rates: ABI reports 92% of income protection claims paid (high vs other insurance). Common rejection reasons: non-disclosure of pre-existing conditions, fraud, definition disputes. Best practice: full disclosure on application, choose 'own occupation' if affordable, review every 5 years.
Example: Age 35, £45,000 salary, 60% cover to age 67
- Monthly income to protect: £45,000 x 60% / 12 = £2,250
- Deferred period: 13 weeks (employer sick pay covers first 3 months)
- Term: to age 67 (32 years)
- Estimated monthly premium: £45-£65
- Annual cost: £540-£780 (tax-free payout if claimed)
Source: MoneyHelper — Income protection
Frequently Asked Questions
- How much income protection do I need?
- Cover 50-65% of gross salary (insurer caps to maintain return-to-work incentive). Sample: £45,000 salary → £22,500-£29,250/year cover (£1,875-£2,440/month). Most income protection pays tax-free. Subtract employer sick pay benefit: NHS gives 6 months full + 6 months half — match deferred period to this; private sector usually only SSP £116.75/week — choose shorter deferred period. Self-employed: no sick pay, choose 1-3 month deferred. Cost: £20-£60/month for £20-£30k cover for healthy 35-year-old.
- How long does income protection pay?
- Two types: (1) Long-term — pays until return to work, retirement, end of policy term, or death. Most expensive but comprehensive. (2) Short-term — pays for fixed period (typically 12-24 months), then stops. Cheaper but limited. Choose: long-term for primary cover; short-term to supplement employer sick pay. Premium difference: long-term 2-3× short-term cost. Long-term essential for self-employed and those without significant savings; short-term acceptable supplement for those with employer sick pay.
- Own occupation vs any occupation — what's the difference?
- Own occupation: pays if you can't do YOUR job (e.g. surgeon developing tremor — even if she could work as receptionist). Most expensive but easiest to claim. Suited occupation: pays if you can't do any job of similar pay/status. Any occupation: pays only if you can't do ANY job (very strict — many claims rejected). Cheapest but hardest. Recommendation: choose own occupation if affordable, especially for specialist roles. Sample premium difference: own occ 1.5-2× suited occ; 2-3× any occ.
- How likely am I to claim income protection?
- 1 in 4 UK workers off work for 1+ months in working lifetime (ABI). Mental health and musculoskeletal conditions: account for 60-70% of claims (NOT cancer/heart attacks which dominate critical illness). UK income protection claim rates: 92% of claims paid (ABI 2024). Common rejections: non-disclosure (smoking, BMI, conditions), fraud, definition disputes. Best practice: full medical disclosure on application; choose own occupation; review every 5 years; combine with critical illness lump sum for serious illnesses.