Why income protection matters more than CI
Income protection (IP) is an FCA-regulated insurance that replaces a portion of your income (typically 50% to 65%) if illness or injury stops you working, after a chosen deferred period. It pays until you can return, you retire, or the policy ends. Critical illness cover only pays a lump sum on specific named conditions, which is much narrower. Statutory Sick Pay is £116.75 a week (2024-25) for up to 28 weeks, which is well below most people’s mortgage payment. IP fills the actual gap.
A 35-year-old earning £50,000 with a 13-week deferred period can buy IP paying £2,500 a month to age 67 for roughly £30 to £45 a month, depending on occupation. If a back injury keeps them off work for two years, that is £60,000 of replacement income for about £900 of premiums. A critical illness policy at the same cost would only pay if the diagnosis matched the policy list, with most back conditions excluded.
Relying on the employer’s sick pay scheme. Most employers run sick pay for 3 to 12 months, then drop you to SSP. If you are still unable to work, your personal IP policy is the only thing that bridges the gap to retirement.
A 60-second lesson on this, with a worked drill, lives inside the Finlo app. Free, forever, on the basics.