Is income protection insurance worth it Martin Lewis?
Is Income Protection Insurance Worth It? Martin Lewis Weighs In
When money is tight and monthly outgoings are already stretching the budget, spending more on an insurance policy can feel like the last thing you want to do. Yet income protection insurance sits in a category that financial experts return to time and again when the question of financial resilience comes up. For many households across the UK, it remains one of the most overlooked and misunderstood forms of cover available.
The principle behind it is straightforward. If you become too ill or injured to work, income protection insurance pays out a regular monthly sum, typically a percentage of your pre-illness earnings, until you either recover and return to work or reach the end of the policy term.
What Does Martin Lewis Say About Income Protection Insurance?
Martin Lewis, the founder of MoneySavingExpert and arguably the UK’s most trusted consumer finance voice, has consistently highlighted income protection insurance as one of the most important financial products working adults should consider. Unlike some insurance products that he regularly urges people to avoid or at least scrutinise carefully, income protection is one he tends to speak about with genuine recommendation.
His core argument is that your ability to earn is your most valuable financial asset, and most people spend more time insuring their car or their mobile phone than they do protecting the income that funds everything else in their lives. He has pointed out that statutory sick pay from the government is far lower than most people assume, sitting at just £116.75 per week as of 2025, which makes the gap between what the state provides and what a household actually needs dangerously wide for many families.
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Do You Really Need Income Protection Insurance?
Whether income protection insurance is genuinely necessary depends heavily on your personal circumstances. If your employer offers a generous sick pay scheme that runs for six months or longer, or if you have substantial savings that could cover your household costs for a sustained period, your urgency may be lower. For the self-employed, however, or for those working in organisations where statutory sick pay kicks in almost immediately, the need can be pressing.
The statistics paint a sobering picture. Research from Legal and General’s Deadline to Breadline report found that the average UK worker could survive for only 24 days on savings before their finances became critically strained. For anyone without a financial safety net of that kind, income protection is not so much a luxury as a practical necessity.
| Scenario | Likely Need for Income Protection |
|---|---|
| Employed with 6+ months employer sick pay | Lower, but worth reviewing |
| Self-employed with no sick pay | High |
| Employed with statutory sick pay only | High |
| Parent with dependants | High |
| Single person with large savings buffer | Moderate |
| Person with existing critical illness cover | Moderate (different products) |
Is It Worth Paying for Income Protection Insurance?
The cost of income protection varies considerably based on your age, occupation, health history, and the waiting period you choose before the policy pays out. A deferred period of 13 weeks, for example, will reduce your premiums significantly compared to a policy that pays from day one of illness. Many financial advisers suggest aligning the deferred period with how long your employer sick pay runs, so the policy picks up seamlessly where your employer leaves off.
For most people in reasonable health who take out cover in their thirties, monthly premiums for a mid-range policy sit somewhere between £20 and £60. Balanced against the potential loss of income over months or even years, the value calculation tends to come out firmly in favour of having the cover. The real question is not whether it costs money; the real question is what it would cost you not to have it.
Does Income Protection Cover Arthritis?
Arthritis is one of the most common reasons people in the UK find themselves unable to work. According to Versus Arthritis, around 10 million people in England live with some form of arthritis, and its impact on mobility and daily function can vary enormously from mild stiffness to complete incapacity. Income protection insurance can absolutely pay out for arthritis, provided the condition prevents you from performing your occupation to the degree specified in your policy.
The key distinction lies in how your policy defines inability to work. Some policies use an “own occupation” definition, meaning the insurer assesses whether you can do your specific job. Others use a broader “suited occupation” or “any occupation” definition, which sets a significantly higher bar for a payout. If you have an existing diagnosis of arthritis, it is likely that the insurer will either exclude it from cover or apply a premium loading, so transparency with your insurer and a close reading of the policy terms is essential. You can find further guidance on living with long-term health conditions and your employment rights via GOV.UK’s Disability and Health Employment guidance.
| Income Protection Policy Type | Definition Used | Payout Threshold |
|---|---|---|
| Own Occupation | Can you do your specific job? | Lower bar, easier to claim |
| Suited Occupation | Can you do a similar job? | Medium bar |
| Any Occupation | Can you do any job at all? | Higher bar, harder to claim |
| Activities of Daily Living | Can you perform basic tasks? | Highest bar |
Understanding Policy Terms Before You Commit
Reading the small print of any insurance policy is rarely anyone’s idea of an enjoyable afternoon, but with income protection it genuinely matters. Policies differ not just in the definitions they use for inability to work but also in what they exclude, how long they pay out for, and whether premiums are guaranteed or reviewable over time. Reviewable premiums may start lower but can rise substantially as you age, so a policy that looks affordable at 35 may look very different at 55.
The NHS also provides guidance on managing long-term illness and chronic conditions, and understanding how these interact with insurance products is an important part of financial planning. The NHS’s guidance on long-term conditions provides a helpful reference point for those unsure how their health circumstances might affect a claim or policy application.
Is Income Protection Insurance Worth It? Making the Right Decision for You
The honest answer is that for the vast majority of working adults in the UK, income protection insurance represents one of the most sensible financial decisions they can make. It is not the most glamorous product, and it is not one that pays out when things are going well. Its entire value lies in what it does when things go badly, and that is precisely the moment when having it in place matters most.
Martin Lewis’s position reflects a broader consensus among independent financial advisers: this is a product that addresses a real and often underestimated risk. The gap between what the state will provide if you cannot work and what your household actually costs is, for most people, substantial. Income protection exists specifically to bridge that gap.
If you are considering a policy, the best approach is to speak with an independent financial adviser who can compare the market on your behalf and explain the specific terms of any product you are considering. Shopping around matters significantly here, as premiums and terms vary widely across insurers.
- Income protection insurance pays a regular income if illness or injury prevents you from working, with payout amounts and durations varying by policy and insurer.
- Martin Lewis advocates for income protection as one of the most important financial products working people often overlook, particularly given the low level of statutory sick pay.
- Conditions such as arthritis can be covered, but policy wording around the definition of inability to work and pre-existing condition exclusions must be scrutinised carefully before purchase.
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Is Income Protection Insurance Worth It? Frequently Asked Questions
Income protection insurance is a long-term policy that pays a regular monthly income if you are unable to work due to illness or injury. You can learn more about the product category on the Income protection insurance Wikipedia page.
Most policies pay between 50% and 70% of your pre-illness gross income, giving you a meaningful proportion of your salary while you are unable to work. The exact amount depends on the policy terms you agreed at the outset.
Policies can pay out for a defined term of two or five years, or they can be set up to pay until retirement age, depending on the level of cover you choose and your premium budget. Longer-term policies typically cost more but provide far greater protection.
No, they are distinct products. Critical illness cover pays a one-off lump sum on diagnosis of a specific condition listed in the policy, whereas income protection pays a regular monthly income for as long as you remain unable to work.
Yes, and for self-employed workers it is arguably more important than for those in employment, as there is no employer sick pay scheme to fall back on. Premiums and definitions vary, so comparing specialist self-employed policies is advisable.
The deferred period is the waiting time between becoming unable to work and the policy beginning to pay out, and it can range from one week to two years. Choosing a longer deferred period reduces your premium but requires you to fund the gap from savings or employer sick pay.
Many policies do cover mental health conditions such as severe depression or anxiety disorders, though specific exclusions vary between insurers. Checking the policy wording and asking direct questions of the insurer about mental health cover before purchasing is strongly recommended.
Standard income protection insurance does not cover redundancy; it only covers inability to work due to illness or injury. A separate product, accident, sickness and unemployment (ASU) cover, is designed to include redundancy protection.
If you have been diagnosed with or treated for arthritis before taking out a policy, insurers are likely to treat it as a pre-existing condition, which may result in an exclusion or a higher premium. Always disclose health conditions fully when applying to avoid a claim being voided later.
An own occupation definition means the insurer will pay out if you cannot perform your specific job due to illness or injury, which is the most favourable definition for claimants. Policies using broader definitions set a higher bar and are harder to claim against successfully.
Premiums paid personally for income protection are generally not tax deductible, though the payouts themselves are not subject to income tax when paid to an individual. Policies taken out by employers on behalf of employees sit within different tax rules.
Yes, income protection can sit alongside life insurance, critical illness cover, and private health insurance, as they each cover different risks and pay out in different circumstances. Having complementary cover across products gives the most comprehensive financial protection.
Start by calculating your essential monthly outgoings, including mortgage or rent, utilities, food, and any other commitments, and set the cover level to at least match that figure. An independent financial adviser can help ensure the policy terms and premium structure align with your specific needs and budget.
If you believe your claim has been unfairly rejected, you can refer your complaint to the Financial Ombudsman Service, which is a free and independent service for resolving disputes between consumers and financial businesses in the UK.
Further Reading on Income Protection Insurance
For those seeking to understand the complexities of income protection insurance, we’ve assembled comprehensive guidance on selecting appropriate coverage, including how to evaluate different policies, interpret insurance terms, and ensure you’re securing the most suitable protection for your specific circumstances and income requirements.
