What is income protection insurance?

None of us typically like to think much about what might happen if we were taken ill, suffered an accident or were made redundant.

These are not pleasant subjects; particularly in terms of the effect they may have on our ability to generate income for our families and ourselves.

Yet as responsible individuals, we may feel that we have a duty to consider the implications of suddenly losing our income – and those implications may be grave.

The mortgage

State aid may prove to be very limited and however initially sympathetic our mortgage lenders may be, their patience may become exhausted and suddenly talk would move to repossession.


The modern household typically has more debts than simply the mortgage and similar problems may begin to arise with things such as car repayments, credit card bills, the utilities and bank loans/HP etc.

The insurance options

Payment protection insurance exists to help us cope with a sudden loss of income on a short to medium term basis.

It can be directed towards a range of specified bills, including the mortgage, to ensure that these are kept up to date during the period we are trying to find alternative income.

The conditions covered by this type of policy typically include sickness, accidents and compulsory redundancy.

Income protection cover insurance provides an alternative to cope with what might be described as potentially more serious situations.

That might include scenarios where you were hit by severe ill health and the prospect that this would continue into the indefinite future. In such a situation, this type of policy would payout a monthly income to you on an indefinite basis (to your normal retirement age).

These are two powerful types of insurance cover that may offer you reassurance and peace of mind.

Some points to note

Redundancy is typically not included as something covered by income protection insurance.

It is also worth noting that there are some situations under which you may lose your income for reasons of your own decision. Examples of that might include dismissals, resignations and career breaks etc. In such circumstances, payment protection insurance may typically not apply.

Is insurance worthwhile?

This is always one of those difficult questions to answer and ultimately each individual must make up their own mind.

It is sometimes said that no insurance of any type is ever worthwhile – up until the point you need to make claim!

In fact, it might be argued that the slightly tongue in cheek sentiment expressed there is missing the point because one of the key benefits of this type of cover is the fact that it provides you and those around you with a degree of comfort and security.

It might be very difficult to put a price on how much that is worth to you.