Your income is the foundation of your financial life. It pays for your mortgage, covers your bills, puts food on the table, and supports your family’s lifestyle.
But here’s a sobering thought: what would happen if your income suddenly stopped tomorrow?
Whether it’s due to illness, injury, or an accident, many families would struggle within just a few weeks if their regular pay vanished. That’s where income protection insurance comes in. It’s designed to step in when you can’t work, ensuring your financial commitments are covered and your family remains secure.
What Is Income Protection?
Income protection is an insurance policy that provides a regular monthly income if you’re unable to work due to illness or injury. Unlike critical illness cover, which pays out a single lump sum, income protection is all about keeping your cash flow steady month after month.
This means your mortgage, bills, and everyday living costs are still covered, even if you’re out of work for an extended period.
How Does Income Protection Work?
Income protection is flexible and can be tailored to your circumstances. Here’s how it works:
- Deferment period – You choose how long you’d wait before payments start (e.g. 1 month, 3 months, or 6 months). The longer the deferment, the lower the premium.
- Payout percentage – Policies typically pay between 50–70% of your gross salary. This is usually enough to cover essentials while keeping premiums affordable.
- Duration – Payments continue until you return to work, the policy ends, or you reach retirement age.
Example: If your monthly salary is £2,500 and you can’t work due to illness, income protection could pay £1,500–£1,750 every month until you recover.
Why Income Protection Is Essential for Homeowners
Mortgages don’t wait. If your income disappears, your mortgage lender will still expect monthly repayments. For most families, this is the single biggest expense each month, and one of the first worries if something goes wrong.
With income protection in place, you don’t have to wonder how long you’d last on savings, or whether you’d need to borrow money. Instead, you can be confident that your mortgage is covered and your home is secure, no matter what happens to your income.
The Rising Risk – Why It Matters Now More Than Ever
- Statistically, one in three people will be unable to work for more than 6 months at some point before retirement.
- Most UK households have less than 3 months’ worth of savings. That means one long-term illness or accident could put them under immediate financial pressure.
- Employers rarely offer long-term sick pay. In fact, Statutory Sick Pay (SSP) is only £116.75 per week (2025 rates)—not nearly enough to cover a mortgage and living costs.
This is why income protection is increasingly seen as one of the most valuable forms of cover, especially for those with financial commitments like mortgages.
Income Protection vs. Other Cover – Building a Safety Net
It’s easy to confuse the different types of protection, so let’s break it down:
- Life Insurance – Pays out a lump sum when you die.
- Critical Illness Cover – Pays a lump sum on diagnosis of a serious illness.
- Income Protection – Pays an ongoing monthly income while you’re unable to work.
Together, they create a complete financial safety net. Life insurance protects your family if you die, critical illness cover protects you if you’re diagnosed with a serious condition, and income protection covers you if you can’t work for a long period.
Who Should Consider Income Protection?
While everyone can benefit, it’s particularly important for:
- Homeowners with mortgages – To keep monthly repayments safe.
- Families reliant on one main income – Where losing one salary would cause hardship.
- Self-employed workers – With no employer sick pay safety net.
- Young professionals – Who may assume they don’t need it, but who would face years of financial exposure if illness struck early.
If you rely on your income to live (and who doesn’t?), then protecting it should be a priority.
Common Objections – And the Truth
“I’ve got sick pay from work.”
Most employers only offer full sick pay for a few weeks or months. Beyond that, it usually drops to SSP, around £116 per week. Income protection can bridge that gap.
“I’m healthy; I don’t need it.”
Accidents and unexpected illnesses happen at all ages. In fact, younger, healthier applicants get cheaper premiums. Waiting until later only costs more.
“It’s too costly.”
Policies are flexible. By choosing a longer deferment period (say, 6 months), premiums can be surprisingly affordable. For many people, it costs less than a coffee a day to protect their income.
Real-Life Examples
- A tradesperson injured on the job couldn’t work for 12 months. His income protection covered 60% of his salary, meaning he could keep up mortgage payments and support his family while focusing on recovery.
- A teacher diagnosed with long COVID relied on her policy to cover essential bills during her absence from work.
- A self-employed business owner recovering from major surgery used her policy payouts to keep the household running until she could return to work.
FAQs – Income Protection Explained
Q: How long does income protection pay out for?
A: Depending on your policy, payments can continue until you’re well enough to return to work, or until retirement age.
Q: Can I claim more than once?
A: Yes, unlike critical illness cover, income protection can pay out multiple times if you have different periods of illness or incapacity.
Q: Is it tax-free?
A: Yes, if you pay for the policy personally, payouts are tax-free.
Q: How soon does it start paying out?
A: That depends on the deferment period you choose, anything from 1 month to 12 months.
Why Choose Calluna?
At Calluna Financial, we:
- Work with a wide panel of insurers to find the right fit for your circumstances.
- Understand the pressures of mortgage repayments and family budgets.
- Tailor cover so it’s affordable and effective, without unnecessary extras.
- Are local and approachable, here to support families across Falkirk, Stirling, Clackmannanshire, and beyond.
Conclusion – Protecting Your Lifestyle and Your Home
Your ability to earn an income is your most valuable financial asset. Without it, everything else, your mortgage, your lifestyle, your future, can be at risk.
Income protection is about safeguarding that asset. It gives you the confidence that if life takes an unexpected turn, you and your family can stay financially secure.
Book a free consultation with Calluna Financial today. Let’s find the right income protection policy for you, so your mortgage and lifestyle are protected, no matter what happens.
