Income protection: more than just a safety net

16th February 2023

At a glance

Ensuring you have income protection could offer you peace of mind, knowing that your mortgage and bills will be paid if you’re taken ill and unable to work.

And with the right protection in place, you may be able to afford to allocate less of your funds for emergencies and more towards reaching your financial goals.

Loss of earnings due to illness is not uncommon, so working with us to find the best protection for you is worthwhile.

Is it worth getting income protection?

Imagine never having to worry about losing your income. What doors would that open up for you and your family?

Income protection insurance pays a regular monthly amount if you can’t work because you’re unwell or have suffered 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, could allow you to make plans with greater peace of mind.

For example, it might mean you can afford to put a little less into your emergency fund and invest that money into, say, Junior ISAs for the kids, or your own pension fund.

It’s worth recognising that, without income protection insurance, a sudden loss of your wages could have far-reaching effects on your financial future.

“When your income stops due to an unexpected accident or illness, how will you continue to pay into your savings?” says Dean Hughes, Key Account Manager at St. James’s Place Protection Planning.

“Long-term serious conditions can force you into making decisions to disinvest some or all of your investments, so goals you have planned and worked hard to keep on track are gone.”

What does an income protection policy cover?

In the past two years, 13% of workers had two months or more off work due to either illness, injury or a mental-health event, according to a report by insurer LV=.1

As income protection will cover around 60% of your monthly wage if you can’t work, it will help to cover your outgoings. This means you can keep more of your savings and investments intact, leaving them the potential to continue to accrue interest and returns, so your financial goals stay within reach. 

If you were forced to dip into your investments to pay the bills, it could make the stress of not being able to work even worse, especially if you’re off work with a mental-health problem.

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.

Aviva, one of the UK’s largest income-protection providers, paid out £51.2 million in income protection claims in 2021, helping 4,300 customers and their families – and 21% of claims related to a mental-health condition, the second most common reason.2

Dean says: “Mental-health problems are so common. Think of having financial concerns on top to fuel this condition.

“I am certain the cash injection income protection provides individuals gives them the chance to concentrate on getting better.

“Not forgetting the value-added benefits that exist on all modern-day insurance products, such as mental-health support or counselling support, among others – typically for free.”

What about sick pay?

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.3

Many self-employed people will receive nothing at all – something else the report found was not well known.

At the same time, the average working household is only 19 days from running out of money if they were to lose their income, according to insurer Legal and General.4

Small surprise, then, that more than one in four of those who don’t have income protection would like to have it.5

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. “With income protection, there are so many factors to consider when choosing the right policy,” says Dean.

We can help with this, talking you through the differences between policies and advising you whether income-protection payments affect your ability to claim state benefits, or how pre-existing conditions might impact your eligibility. To put this into context, we currently have access to approximately 175 variances in protection products across our providers. With so many options out there, working with us will help you find the best one for you.

A good protection adviser will do three things, says Dean. The first will be a thorough fact find, to identify the type of protection products most suitable to a client’s needs. They’ll also ask questions to help them understand anything that could affect terms on an application. And finally, they’ll conduct research with different providers to determine whether a client’s individual situation will have an effect on the protection they could apply for.

“The average client needs expert support to navigate all of these potential landmines,” concludes Dean.

Seek advice

To find the right income protection insurance for you and safeguard your financial future, call us today.

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.


1,5 Reaching Resilience: The Role of Protection in Building Financial Resilience, LV=, January 2023 (From a survey of 4,000 nationally representative UK adults)
2Individual Protection Claims Report 2022, Aviva, May 2022 (Based on 5,035 claims)
3The Great Protection Shift, Association of Mortgage Intermediaries, November 2022 (From a survey of 3,000 UK adults)
4Working Families See Resilience Plummet to Just 19 Days, Legal & General, August 2022 (From an online survey among 5,021 UK consumers aged 18 to 65)

Income protection: more than just a safety net
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