---
title: "Income Protection Insurance, Deferred Periods and Sick Pay"
description: "Income protection pays a monthly income if illness or injury stops you working: deferred periods, own occupation, 2026 sick pay, self-employed and directors."
url: "https://mortgagelane.com/insurance/income-protection"
site: "Mortgage Lane"
collection: "insurance"
date: "2026-10-08"
author: "Joseph Lane"
category: "Insurance"
reviewed: "2026-10-08"
reading_time: "29 min"
byline: "Joseph Lane"
author_credentials: "CeMAP · FCA authorised firm"
language: "en-GB"
robots: "index,follow"
---

# Income Protection Insurance, Deferred Periods and Sick Pay

Income protection pays a monthly income if illness or injury stops you working: deferred periods, own occupation, 2026 sick pay, self-employed and directors.

Income protection pays a monthly income if illness or injury stops you working: deferred periods, own occupation, 2026 sick pay, self-employed and directors.

[Income protection insurance](https://mortgagelane.com/definitions?term=income-protection)

Insurance

Insurance that pays a monthly income, a proportion of your earnings, if illness or injury stops you working, starting after a waiting time called the deferred period.

[Read the full definition of Income protection insurance](https://mortgagelane.com/definitions?term=income-protection)

## Expert advice on income protection

Speak to a Mortgage Lane adviser about your options.

## In short

Income protection insurance pays a monthly income, free of income tax on a personal policy, if illness or injury stops you working. It starts after a deferred period you choose, which can be matched to the end of your employer's sick pay, and pays until you return to work or the benefit period or policy ends. For comparison, Statutory Sick Pay is at most £123.25 a week, as at October 2026.

## What is income protection insurance?

**[Income protection](https://mortgagelane.com/definitions#def-income-protection) is a long-term insurance policy that replaces part of your income if you cannot work because of illness or injury, paying a monthly benefit after a chosen [deferred period](https://mortgagelane.com/definitions#def-deferred-period) until you recover, the benefit period ends or the policy reaches its end date.** The policy can pay out more than once over its term, for separate claims, subject to its terms. The difference between income protection and [critical illness cover](https://mortgagelane.com/definitions#def-critical-illness-cover) is what triggers payment: critical illness cover pays a lump sum on diagnosis of a condition listed in the policy, whether or not you can work, while income protection pays when you cannot work and does not depend on a particular diagnosis. Back problems, mental health conditions and other common causes of long absence are covered unless the policy excludes them. Our page on [critical illness cover when it is declined](https://mortgagelane.com/insurance/critical-illness-declined) explains how the two policies fit together.

The benefit replaces part of your income, up to a maximum each insurer sets as a proportion of earnings. Each insurer also sets its own rules on other income you receive while you are off work, such as state benefits or payments from other similar policies, which a policy may deduct from the benefit ([Financial Ombudsman Service: income protection insurance](https://www.financial-ombudsman.org.uk/businesses/resolving-complaint/complaints-deal/insurance/medical-insurance/income-protection-insurance)). Benefits from a personal policy you pay for yourself are free of income tax: the law exempts payments from a policy that insures against a health or employment risk where no income tax relief was given on the premiums ([legislation.gov.uk: Income Tax (Trading and Other Income) Act 2005, section 735](https://www.legislation.gov.uk/ukpga/2005/5/section/735); [HMRC manual: IPTM6110](https://www.gov.uk/hmrc-internal-manuals/insurance-policyholder-taxation-manual/iptm6110)). You choose the deferred period so that the benefit starts when sick pay stops. For an employee, that is when any employer scheme has ended and [Statutory Sick Pay](https://mortgagelane.com/definitions#def-statutory-sick-pay), up to £123.25 a week from 6 April 2026, is all that remains.

Income protection is a form of [protection insurance](https://mortgagelane.com/definitions#def-protection-insurance). In the regulator's terms it is a pure protection contract: long-term insurance whose benefits are paid only on death or on incapacity through injury, sickness or infirmity, with no surrender value ([FCA Handbook: glossary, pure protection contract](https://www.handbook.fca.org.uk/handbook/glossary/G935.html)). The [Prudential Regulation Authority](https://mortgagelane.com/definitions#def-prudential-regulation-authority) supervises insurers ([Bank of England: prudential regulation](https://www.bankofengland.co.uk/prudential-regulation)). The [Financial Conduct Authority](https://mortgagelane.com/definitions#def-financial-conduct-authority)'s Insurance: Conduct of Business sourcebook, ICOBS, applies to the insurer and to any firm that advises on or arranges the policy, which is insurance distribution ([FCA Handbook: ICOBS 1.1](https://www.handbook.fca.org.uk/handbook/ICOBS/1/1.html)). A mortgage on your home comes under a separate set of rules, [MCOB](https://mortgagelane.com/definitions#def-mcob). A complaint about the sale of a policy, or about a claim, that the firm does not resolve can go to the [Financial Ombudsman Service](https://mortgagelane.com/definitions#def-financial-ombudsman-service).

Mortgage Lane helps employees, the self-employed, contractors and company directors with income protection, including people with existing health conditions and people in higher-risk occupations. Cover can sit alongside a [residential mortgage](https://mortgagelane.com/mortgages/residential-property-mortgages), where the income keeps the mortgage paid. A household that relies on one income, such as a buyer with a [single person mortgage](https://mortgagelane.com/mortgages/single-person-mortgages), has no second salary to cover the payments while that income stops. Income protection sits beside the other policies on our [insurance](https://mortgagelane.com/insurance) pages, including [life insurance](https://mortgagelane.com/definitions#def-life-insurance), [family income benefit](https://mortgagelane.com/definitions#def-family-income-benefit) and critical illness cover.

Critical illness cover pays a lump sum on diagnosis of a listed condition, whether or not you can work; income protection pays a monthly income when illness or injury stops you working, whatever the diagnosis, unless the policy excludes it.

## Income protection costs: how premiums are set

**Income protection premiums are set by each insurer from the person it is covering and the shape of the policy, and this page quotes no premiums.** The insurer looks at your age, occupation, health and smoking status, and at the policy itself: the benefit amount, the deferred period, the occupation definition and the benefit period. A longer deferred period and a limited benefit period lower the premium, because the insurer starts paying later or pays for a shorter time on each claim. [Own occupation](https://mortgagelane.com/definitions#def-own-occupation) cover and a full-term benefit period raise it, since the policy then pays in more circumstances and for longer.

The premium can be guaranteed or reviewable. The insurer cannot change a guaranteed premium except in the ways the policy sets out at the start, such as the rises built into an age-costed premium. It can change a reviewable premium at the reviews the policy sets out. An age-costed premium starts lower and rises as you get older, while a level premium is set at the start. Indexation, if you choose it, raises the benefit each year in line with inflation, so the cover keeps its value against prices. Exclusions and higher premiums for health or occupation come out of [underwriting](https://mortgagelane.com/definitions#def-insurance-underwriting), the insurer's assessment of the application, covered in the types section below. The policy has no cash-in value: the premiums pay for cover only, and the policy pays out only on a valid claim.

**Want your income protected?** Get in touch with your income, your employer's sick pay and your monthly outgoings. The policy is built around when your pay stops.

## Income protection policy checklist

**Every income protection policy is built from the same features, and each insurer sets its own options and limits for them.** The table lists what to compare on any policy, including the benefit amount and the tax on the benefit. The Statutory Sick Pay figures that decide when cover needs to start are in the sick pay section below, and the calculator on this page works out the gap for your own income. Where a feature varies by insurer, the policy wording decides it, so two policies with the same monthly benefit can pay in different circumstances.

## Income protection policy checklist

*Income protection policy checklist*

| Feature | How it works |
| --- | --- |
| Benefit amount | A proportion of earnings, up to a maximum each insurer sets |
| Other income | Some insurers reduce the benefit by other income received while off work, such as state benefits or payments from similar policies |
| Deferred period | The weeks off work before benefit starts, such as 4, 8, 13, 26 or 52 weeks; the options vary by insurer |
| Benefit period | Full term, paying until return to work or the end of the policy, or limited, such as one, two or five years for each claim |
| Occupation definition | Own occupation, suited occupation, or activities of daily work |
| Premium type | Guaranteed or reviewable; age-costed or level |
| Indexation | Optional: the benefit rises each year with inflation |
| Proportionate and rehabilitation benefits | Partial income on a reduced return to your own job (rehabilitation) or in a new, lower-paid job (proportionate) |
| Exclusions | Conditions excluded after underwriting, named in the policy |
| Policy term | Set at the start, for example to planned retirement age; cover ends with the policy |
| Tax on the benefit | Personal policy: free of income tax. Policy paid for by an employer: taxed as earnings through payroll |

Options, limits and definitions vary by insurer, and each policy's terms decide a claim. The other income, occupation definition and proportionate and rehabilitation rows follow the Financial Ombudsman Service's guidance on income protection, and the tax row follows HMRC's manuals (IPTM6110 and EIM06410), checked 8 October 2026.

## Types of income protection cover, and who each suits

**Who the policy is for decides when the benefit needs to start, which income it is based on and who pays for it.**

### Employees

Employees can set the deferred period to match the end of their employer's sick pay scheme, so benefit starts when full pay stops. Employer schemes differ: some pay full salary for a number of weeks, some follow it with half pay, and the contract or staff handbook sets the terms. Contractual sick pay counts towards Statutory Sick Pay for the same days ([legislation.gov.uk: Social Security Contributions and Benefits Act 1992, Schedule 12](https://www.legislation.gov.uk/ukpga/1992/4/schedule/12)), so the 28 weeks of SSP run alongside the employer's scheme rather than after it. SSP continues for up to 28 weeks but replaces only a small part of most incomes: at £123.25 a week it comes to about £534 a month. A contractor employed through an [umbrella company](https://mortgagelane.com/definitions#def-umbrella-company) is that company's employee, with the same employment rights as other employees ([GOV.UK: working through an umbrella company](https://www.gov.uk/guidance/working-through-an-umbrella-company)). Our pages on [contractor mortgages](https://mortgagelane.com/mortgages/contractor-mortgages) and [IT contractor mortgages](https://mortgagelane.com/mortgages/it-contractor-mortgages) cover how lenders read that pay.

**Get in touch** with your contract's sick pay terms.

### Self-employed income protection

The self-employed have no employer sick pay and cannot get Statutory Sick Pay, which is paid only to people classed as employees ([GOV.UK: Statutory Sick Pay eligibility](https://www.gov.uk/statutory-sick-pay/eligibility)). Their income stops on the first day of absence, so a short deferred period shortens the time without income. The benefit is based on taxable profit, evidenced by tax returns or accounts. Insurers read the [net profit](https://mortgagelane.com/definitions#def-net-profit) shown on the [tax calculations](https://mortgagelane.com/definitions#def-sa302) from [HMRC](https://mortgagelane.com/definitions#def-hm-revenue-and-customs), and each insurer's own terms set how it defines earnings for a self-employed customer. Some policies suit irregular incomes. HMRC does not allow a sole trader or partner to deduct the premiums for their own sickness cover from trading profits, and treats the benefits as generally tax-free ([HMRC manual: BIM45560](https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim45560)). Lenders use the same tax returns to assess a mortgage, as our [self-employed mortgages](https://mortgagelane.com/mortgages/self-employed-mortgages) page explains, and there are separate pages on [sole trader mortgages](https://mortgagelane.com/mortgages/sole-trader-mortgages), [one year self-employed mortgages](https://mortgagelane.com/mortgages/one-year-self-employed-mortgages) and [CIS mortgages](https://mortgagelane.com/mortgages/cis-mortgages).

**Get in touch** with your tax calculations.

### Company directors and executive income protection

Directors can hold a personal policy, or the company can pay for [executive income protection](https://mortgagelane.com/definitions#def-executive-income-protection). Under an executive policy the company owns the policy and pays the premium, and it can deduct the premium as a business expense where the premium meets HMRC's test, which looks at what is insured and whether the insurance is taken out for the purposes of the trade ([HMRC manual: BIM45500](https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim45500)). The insurer pays the benefit to the company, which pays it to the director through payroll, where it is taxed as income: HMRC treats sick pay that an employer funds through an insurance policy as the employee's taxable earnings ([HMRC manual: EIM06410](https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim06410)). A personal policy belongs to the director, and its benefit is free of income tax like any personal policy. Where a director is paid a mix of salary and [dividends](https://mortgagelane.com/definitions#def-dividend-income), both figures affect the benefit, and lenders read the same split, as our page on [limited company director mortgages](https://mortgagelane.com/mortgages/limited-company-director-mortgages) explains. Cover the company takes out on its own account, against the loss of profits a director's absence or death would cause, is [key person insurance](https://mortgagelane.com/insurance/key-person-insurance), a different policy. Mortgage Lane does not give tax advice, and an accountant can confirm the treatment for a particular company.

**Get in touch** with your salary and dividend split.

### Mortgage payment protection

[Mortgage payment protection](https://mortgagelane.com/definitions#def-mortgage-payment-protection) is a shorter-term policy that covers only the mortgage payment. Some policies cover unemployment as well as illness and injury. Payments last for a limited period set by the policy, such as one or two years. The FCA Handbook treats this kind of cover as a payment protection contract, one that protects the policyholder's ability to keep making payments ([FCA Handbook: glossary, payment protection contract](https://www.handbook.fca.org.uk/handbook/glossary/G2560.html)). It is narrower than full income protection, which replaces part of your income, can be spent on any outgoing and can pay for as long as its benefit period allows. The state's help is narrower still: [Support for Mortgage Interest](https://mortgagelane.com/definitions#def-support-for-mortgage-interest) is paid as a loan towards the interest on the mortgage, for people getting a qualifying benefit, and it does not pay insurance policies or arrears ([GOV.UK: Support for Mortgage Interest](https://www.gov.uk/support-for-mortgage-interest)). Our page on [low income mortgages](https://mortgagelane.com/mortgages/low-income-mortgages) explains how it works.

**Get in touch** with your monthly mortgage payment.

### People with health conditions or higher-risk jobs

Existing conditions may mean exclusions or higher premiums, and for some conditions an insurer may decline. Back and mental health histories can lead to exclusions, and the outcome depends on how each insurer underwrites the condition. Manual and higher-risk occupations attract higher premiums and sometimes restricted occupation definitions. Under the Consumer Insurance (Disclosure and Representations) Act 2012 you have a duty to take reasonable care not to make a misrepresentation to the insurer when you apply ([legislation.gov.uk: Consumer Insurance (Disclosure and Representations) Act 2012, section 2](https://www.legislation.gov.uk/ukpga/2012/6/section/2)). If a careless misrepresentation comes to light at a claim, the insurer's remedy depends on what it would have done had it known. If it would not have offered cover on any terms, it can avoid the policy and refuse all claims, but must return the premiums. If it would have offered cover on different terms, it can treat the policy as if it had been on those terms. If it would have charged a higher premium, it can reduce the claim in proportion, in addition to any change of terms ([legislation.gov.uk: CIDRA 2012, Schedule 1](https://www.legislation.gov.uk/ukpga/2012/6/schedule/1)). The same [disclosure duty](https://mortgagelane.com/definitions#def-consumer-insurance-disclosure) applies to life cover, which our page on [life insurance when declined](https://mortgagelane.com/insurance/life-insurance-when-declined) explains.

**Get in touch** with your medical history and job details.

When a careless misrepresentation surfaces at claim time, an insurer that would have charged more can scale the claim down in proportion, and one that would have declined can avoid the policy and return the premiums.

## How an income protection policy is built

**The three choices that shape an income protection policy are the deferred period, the occupation definition and the benefit period.** Each changes when the policy pays, in what circumstances and for how long, and each moves the premium.

### Deferred period

The deferred period is the time you must be off work before benefit starts. Insurers offer a set of options, such as 4, 8, 13, 26 or 52 weeks, and the choices vary by insurer. Matching it to the end of sick pay avoids paying for cover you do not need: an employee with 13 weeks of full pay has little use for a 4-week deferred period, because the employer is paying in those weeks. A longer deferred period costs less but leaves more weeks to fund from savings or sick pay, and for the self-employed every week of the deferred period is a week without income. The Financial Ombudsman Service notes that proportionate and rehabilitation benefits generally need the claimant to have been unable to work for longer than the deferred period ([Financial Ombudsman Service: income protection insurance](https://www.financial-ombudsman.org.uk/businesses/resolving-complaint/complaints-deal/insurance/medical-insurance/income-protection-insurance)).

### Own occupation and other occupation definitions

Own occupation pays if you cannot do your own job, the role you had just before you became unable to work, even if you could do a different one. Suited occupation pays only if you cannot do any job suited to your experience, and activities-based definitions, which test whether you can carry out everyday work tasks, are the narrowest. Own occupation is the widest of the three, so it pays in the most circumstances, and it raises the premium. For manual and higher-risk jobs some insurers offer only a narrower definition.

### Benefit period

Full-term policies pay until you recover, retire or the policy ends, however long the claim lasts. Limited policies stop after a set time for each claim, such as one, two or five years, at a lower premium, and a limited policy can pay again on a later, separate claim. Some policies pay part of the benefit after you go back to work: rehabilitation benefit when you return to your own job in a reduced capacity, such as part time, and proportionate benefit when you take up a new, lower-paid job, so the income does not stop on the day you go back.

## Statutory Sick Pay in 2026 and the income gap

**From 6 April 2026, Statutory Sick Pay is payable from the first day of sickness at £123.25 a week, or 80% of average weekly earnings if lower, for up to 28 weeks, and the Lower Earnings Limit has been removed.** The Employment Rights Act 2025 made the changes: section 10 removed the three waiting days, and section 11 removed the Lower Earnings Limit and brought in the 80% rate. Both came into force on 6 April 2026 ([legislation.gov.uk: Employment Rights Act 2025, section 10](https://www.legislation.gov.uk/ukpga/2025/36/section/10); [section 11](https://www.legislation.gov.uk/ukpga/2025/36/section/11); [Commencement No. 3 Regulations 2026, regulation 2](https://www.legislation.gov.uk/uksi/2026/373/regulation/2/made)). The weekly rate for the 2026 to 2027 tax year is £123.25 ([GOV.UK: rates and thresholds for employers 2026 to 2027](https://www.gov.uk/guidance/rates-and-thresholds-for-employers-2026-to-2027)). The employer pays it for the days you would normally have worked ([GOV.UK: Statutory Sick Pay, what you'll get](https://www.gov.uk/statutory-sick-pay/what-youll-get)), and you must have done some work under your contract ([GOV.UK: employers, Statutory Sick Pay eligibility](https://www.gov.uk/employers-sick-pay/eligibility-and-form-ssp1)). On earnings of £6,000 a year, average weekly earnings are about £115 and SSP is 80% of that, about £92 a week or £400 a month. On £45,000 the 80% figure is about £692 a week, so the £123.25 rate applies. Sections 12 and 13 of the Act made the same changes in Northern Ireland from the same date, and nidirect points to GOV.UK for the rate ([nidirect: Statutory Sick Pay](https://www.nidirect.gov.uk/articles/statutory-sick-pay)).

Sick pay and income protection work in sequence. An employer scheme may pay more than SSP for a period. Once the scheme ends, SSP may be all that remains, and SSP itself stops after 28 weeks. Because contractual sick pay counts towards SSP for the same days, the 28 weeks run from the start of the absence, so after 13 weeks of full pay, SSP alone pays for weeks 14 to 28. Income protection fills the gap from the end of the deferred period.

After SSP ends, someone still unable to work may be able to apply for Universal Credit or Employment and Support Allowance ([GOV.UK: Statutory Sick Pay eligibility](https://www.gov.uk/statutory-sick-pay/eligibility)). A homeowner getting a qualifying benefit may be able to get Support for Mortgage Interest, a loan towards the interest that is repaid with interest when the home is sold or ownership is transferred. The self-employed have no SSP at all, so for them the gap starts on the first day of absence. The calculator on this page shows the monthly gap at each stage for your own income.

## How income protection is arranged

1. **Income and sick pay.** Gross earnings or profit, and your employer's scheme terms: how many weeks of full pay and half pay, and when they end.
2. **Outgoings.** The mortgage, bills and commitments that must continue while you are off work.
3. **Policy design.** The benefit, the deferred period, the occupation definition and the benefit period, set against the sick pay and the outgoings.
4. **Underwriting.** Health, occupation and lifestyle questions answered accurately and with reasonable care, as the Consumer Insurance (Disclosure and Representations) Act 2012 requires, with any exclusion or change to the premium explained before you accept.
5. **Policy in force.** Reviewed when your income or circumstances change, for example a pay rise, a move to self-employment or a new mortgage.

## When sick pay runs out: the arithmetic

**An illustrative employee earning £45,000 a year, £3,750 a month gross, whose employer pays full salary for 13 weeks of sickness, drops to about £534 a month of Statutory Sick Pay in week 14 and to no sick pay at all from week 29.**

### Step 1. A £45,000 employee with 13 weeks' full pay

This is an illustrative case, not a quote or an offer of insurance. The employee's contract pays full salary for the first 13 weeks of sickness and nothing beyond Statutory Sick Pay after that. Their essential outgoings, the mortgage and the bills that must continue, come to £2,250 a month. The income protection policy in the example has a 13-week deferred period and pays £2,250 a month, which is 60% of gross pay. The 60% is illustrative, because each insurer sets its own maximum and decides whether other income is offset against the benefit.

## Step 1 figures

*Step 1 figures*

| Item | Figure |
| --- | --- |
| Gross annual pay | £45,000 |
| Gross monthly pay | £3,750 |
| Average weekly earnings (£45,000 divided by 52) | £865.38 |
| 80% of average weekly earnings | £692.31, above £123.25, so SSP is paid at £123.25 a week |
| Statutory Sick Pay a month (£123.25 times 52, divided by 12) | £534.08 |
| Employer full sick pay | 13 weeks |
| Essential monthly outgoings, illustrative | £2,250 |
| Income protection benefit, illustrative | £2,250 a month (60% of gross pay) after a 13-week deferred period |

Hypothetical figures for illustration. Statutory Sick Pay at the 2026 to 2027 rate from GOV.UK, checked 8 October 2026. The 60% benefit and the outgoings are illustrative, not an insurer's limit or a budget.

### Step 2. Income by period, with and without cover

The table follows the employee through a long absence, first without a policy and then with the 13-week deferred policy.

## Step 2 figures: income by period off work

*Step 2 figures: income by period off work*

| Period off work | Without income protection | With a 13-week deferred policy paying £2,250 a month |
| --- | --- | --- |
| Weeks 1 to 13 | Full pay, £3,750 a month gross | Full pay, £3,750 a month gross |
| Weeks 14 to 28 | SSP only, about £534 a month | SSP of about £534 plus the £2,250 benefit, about £2,784 a month |
| Week 29 onwards | No sick pay; state benefits only, if eligible | £2,250 benefit until return to work or the end of the benefit period |

Illustrative; SSP at the 2026 to 2027 rate of £123.25 a week. The £2,250 benefit (60% of gross pay) is illustrative: insurer maxima and any offset of other income vary. Benefits from personal policies are paid free of income tax. Worked with the calculator on this page. Not a quote or an offer of insurance.

From week 14 the household loses about £3,200 a month of gross pay without cover: £3,750 less £534.08 of SSP is £3,215.92. Against £2,250 of essential outgoings, SSP leaves £1,715.92 a month unpaid, and from week 29 the whole £2,250 is unpaid. With cover, the benefit and SSP together come to about £2,784 a month in weeks 14 to 28, and the benefit alone carries on from week 29. Because the benefit is free of income tax, it replaces most of the take-home pay that kept the mortgage and bills paid. On £45,000, take-home pay after income tax and employee National Insurance at the 2026 to 2027 rates for England, Wales and Northern Ireland is about £2,993 a month before any pension or student loan deductions ([GOV.UK: rates and thresholds for employers 2026 to 2027](https://www.gov.uk/guidance/rates-and-thresholds-for-employers-2026-to-2027)), so £2,250 is about three quarters of it. Scotland has its own income tax rates, so the take-home figure there differs.

### Step 3. Full pay followed by half pay

If the employer instead pays 13 weeks of full pay followed by 13 weeks of half pay, employer pay lasts 26 weeks. Half pay is £1,875 a month, more than SSP, and because contractual sick pay counts towards SSP the employee receives the £1,875, with no separate SSP payment on top. SSP alone then covers only weeks 27 and 28, and essentials of £2,250 leave £375 a month unpaid during the half-pay weeks. A 26-week deferred period would start the benefit as half pay ends. With a 13-week deferred period, whether the benefit is paid in full alongside half pay depends on the insurer's rules on other income.

### Step 4. The same income, self-employed

A self-employed person with £45,000 of net profit has no employer sick pay and no SSP, so the full £3,750 a month stops on the first day of absence and the whole £2,250 of essentials is unpaid from then on. A 60% maximum on the same profit allows the same £2,250 benefit. The deferred period is the gap their savings must cover: at £2,250 a month, or £519.23 a week, that is about £2,077 of essentials over a 4-week deferred period and £6,750 over 13 weeks.

### What decides the case

Match the deferred period to the day your employer's pay stops, choose own occupation cover where it is affordable, and set the benefit to cover essential outgoings within the insurer's maximum. For an employee, the employer's scheme sets the deferred period; for the self-employed, savings do. Income protection covers the time you are alive but unable to work. Life cover and [family income benefit](https://mortgagelane.com/insurance/family-income-benefit) protect the mortgage and the family if you die, so the two cover different risks to the same household.

## Related topics

- [2026](https://mortgagelane.com/insurance/family-income-benefit)Insurance[Family Income Benefit, Life Cover Paying a Monthly Income](https://mortgagelane.com/insurance/family-income-benefit)Family income benefit: life insurance that pays your family a monthly income to the end of the term, how it pays out, what it costs, indexation and trusts.[Read more about Family Income Benefit, Life Cover Paying a Monthly Income](https://mortgagelane.com/insurance/family-income-benefit)
- [2026](https://mortgagelane.com/insurance/key-person-insurance)Insurance[Key Person Insurance, Keyman Cover and Tax Treatment](https://mortgagelane.com/insurance/key-person-insurance)Key person insurance protects a business against losing someone it relies on: sizing cover on lost profit, loan protection, tax treatment and related cover.[Read more about Key Person Insurance, Keyman Cover and Tax Treatment](https://mortgagelane.com/insurance/key-person-insurance)
- [2026](https://mortgagelane.com/insurance/life-insurance-when-declined)Insurance[Life Insurance When Declined, Refused or Postponed Cover](https://mortgagelane.com/insurance/life-insurance-when-declined)Life insurance when declined: why insurers refuse or postpone, loadings and exclusions, specialist underwriting, over-50s plans and your disclosure rights.[Read more about Life Insurance When Declined, Refused or Postponed Cover](https://mortgagelane.com/insurance/life-insurance-when-declined)

## Income protection calculator

The calculator shows how your income changes as sick pay runs out: the pay lost once employer sick pay ends, any Statutory Sick Pay still due in the 28 weeks from your first day off, the essentials left uncovered and the monthly benefit that would cover them within an insurer's limit. The starting figures are the illustration on this page: £45,000 a year, 13 weeks of full pay, £2,250 of essential outgoings and a 60% illustrative maximum. Enter your own income, your employer's sick pay terms and your outgoings, and set the employee box to 0 if you are self-employed.

Explore your borrowing

Start again

Enter your figures in pounds. Your estimate updates as you go.

Indicative maximum loan

\-

Enter your figures to see an estimate.

Loan to value

[Discuss your options](https://mortgagelane.com/contact)

Indicative estimate only, based on the figures you enter. Insurers set their own maximum benefit, deferred periods and rules on other income, and pay and Statutory Sick Pay are shown before tax. This is not a quote or an offer of insurance.

## Frequently asked questions about income protection

**Q: What is income protection insurance?**

faq-id: what-is-income-protection-insurance

Income protection insurance pays a monthly income if illness or injury stops you working, starting after a deferred period you choose and continuing until you return to work, the benefit period ends or the policy ends. It is not limited to a list of conditions, so it covers most causes of absence unless the policy excludes them, and it can pay out more than once over its term for separate claims. The benefit replaces part of your income, up to a limit each insurer sets. Benefit from a personal policy you pay for yourself is free of income tax.

**Q: Do I need income protection if my employer pays sick pay?**

faq-id: do-i-need-income-protection-if-my-employer-pays-sick-pay

Whether you need income protection depends on how long your employer pays, your savings and the outgoings that must continue, such as the mortgage. Employer sick pay usually lasts a limited time, after which Statutory Sick Pay of up to £123.25 a week, as at October 2026, may be all that remains, and it stops after 28 weeks. Income protection with a deferred period that ends when your employer's pay stops covers the longer absences that sick pay does not. Your contract or staff handbook sets out your employer's scheme.

**Q: Can self-employed people get income protection?**

faq-id: can-self-employed-people-get-income-protection

Yes, self-employed people can get income protection, with the benefit based on taxable profit evidenced by tax returns or accounts. Because the self-employed receive no employer sick pay and cannot get Statutory Sick Pay, their income stops on the first day of absence, so a shorter deferred period shortens the time they go without income. Some policies suit irregular incomes. HMRC does not allow a sole trader or partner to deduct the premiums for their own sickness cover from trading profits, and treats the benefits as generally tax-free ([HMRC manual: BIM45560](https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim45560)).

**Q: What is a deferred period?**

faq-id: what-is-a-deferred-period

A deferred period is the time you must be off work before an income protection policy starts paying, such as 4, 8, 13, 26 or 52 weeks; the options vary by insurer. Setting it to end when your employer's sick pay stops avoids paying for cover during weeks you are already paid. A longer deferred period lowers the premium but means relying on savings or sick pay for longer. The self-employed have no employer pay or Statutory Sick Pay, so for them the deferred period is the whole gap they must fund themselves.

**Q: How much income protection can I get?**

faq-id: how-much-income-protection-can-i-get

Insurers limit income protection benefit to a proportion of your earnings, so it replaces only part of your income, and each insurer sets its own maximum. Some policies also reduce the benefit by other income you receive while off work, such as state benefits or payments from other similar policies, under rules each insurer sets ([Financial Ombudsman Service: income protection insurance](https://www.financial-ombudsman.org.uk/businesses/resolving-complaint/complaints-deal/insurance/medical-insurance/income-protection-insurance)). A practical starting point is the benefit that covers essential outgoings, such as the mortgage and bills, within the insurer's limit.

**Q: Does income protection cover the same conditions as critical illness?**

faq-id: does-income-protection-cover-the-same-conditions-as-critical-illness

No, income protection does not work from a list of conditions: it pays a monthly income if any illness or injury stops you working, after the deferred period, subject to its own underwriting and any exclusions. Critical illness cover pays a lump sum on diagnosis of a condition listed in the policy, whether or not you can work. Income protection can therefore cover absences caused by conditions a critical illness policy does not list, or has declined or excluded. Some people hold both, for different risks: an income while off work, and a lump sum on a serious diagnosis.

**Q: What does own occupation mean?**

faq-id: what-does-own-occupation-mean

Own occupation means the policy pays if illness or injury stops you doing your own job, the role you had just before you became unable to work, even if you could do a different one. It is the widest occupation definition, so it pays in the most circumstances, and it raises the premium. Suited occupation pays only if you cannot do any job suited to your experience, and activities-based definitions, which test everyday work tasks, are the narrowest. For manual and higher-risk jobs some insurers offer only a narrower definition.

**Q: Is income protection benefit taxed?**

faq-id: is-income-protection-benefit-taxed

Benefit from a personal income protection policy you pay for yourself is free of income tax, because the law exempts payments from a policy insuring against a health or employment risk where you had no income tax relief on the premiums ([legislation.gov.uk: ITTOIA 2005, section 735](https://www.legislation.gov.uk/ukpga/2005/5/section/735)). Where an employer pays for a group or executive policy, the benefit reaches you through payroll and is taxed as earnings, as HMRC's guidance on employer-funded sick pay sets out ([HMRC manual: EIM06410](https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim06410)). Mortgage Lane does not give tax advice; an accountant or HMRC can confirm your position.

**Q: How much is Statutory Sick Pay in 2026?**

faq-id: how-much-is-statutory-sick-pay-in-2026

Statutory Sick Pay for 2026 to 2027 is £123.25 a week, or 80% of your average weekly earnings if that is lower, paid by your employer for up to 28 weeks ([GOV.UK: rates and thresholds for employers 2026 to 2027](https://www.gov.uk/guidance/rates-and-thresholds-for-employers-2026-to-2027)). From 6 April 2026, the Employment Rights Act 2025 removed the three waiting days, so SSP is paid from the first day you are off sick on a day you would normally work. It also removed the Lower Earnings Limit, so employees on low pay now qualify. The same changes apply in Northern Ireland.

**Q: Can I get income protection with a health condition?**

faq-id: can-i-get-income-protection-with-a-health-condition

You may be able to get income protection with a health condition, though the insurer may exclude claims related to it, apply a higher premium or, for some conditions, decline. Back and mental health histories can lead to exclusions, and the outcome depends on how each insurer underwrites the condition. You have a duty to take reasonable care to answer the insurer's questions accurately ([legislation.gov.uk: Consumer Insurance (Disclosure and Representations) Act 2012, section 2](https://www.legislation.gov.uk/ukpga/2012/6/section/2)), and a careless or deliberate misrepresentation can let the insurer reduce or refuse a claim later.

**Q: What is the difference between full-term and limited benefit periods?**

faq-id: what-is-the-difference-between-full-term-and-limited-benefit-periods

A full-term income protection policy pays until you recover, retire or the policy ends, however long the claim lasts. A limited benefit period policy stops paying after a set time for each claim, such as one, two or five years, at a lower premium, and can pay again on a later, separate claim. The benefit period sets how long the policy pays on each claim, the deferred period sets when it starts, and the policy term sets the date all cover ends.

**Q: What is executive income protection?**

faq-id: what-is-executive-income-protection

Executive income protection is a policy a company pays for to cover a director or employee. The company owns the policy and pays the premium, which it can deduct as a business expense where HMRC's test is met. The insurer pays the benefit to the company, which pays it to the individual through payroll, where it is taxed as earnings ([HMRC manual: EIM06410](https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim06410)). It differs from key person insurance, which protects the company's own profits. Mortgage Lane does not give tax advice, and an accountant can confirm the treatment for a particular company.

**Q: What happens when Statutory Sick Pay runs out?**

faq-id: what-happens-when-statutory-sick-pay-runs-out

Statutory Sick Pay stops after 28 weeks, and if you are still unable to work you may be able to apply for Universal Credit or Employment and Support Allowance ([GOV.UK: Statutory Sick Pay eligibility](https://www.gov.uk/statutory-sick-pay/eligibility)). A homeowner getting a qualifying benefit may be able to get Support for Mortgage Interest, which is paid as a loan towards the mortgage interest and repaid with interest when the home is sold or transferred ([GOV.UK: Support for Mortgage Interest](https://www.gov.uk/support-for-mortgage-interest)). An income protection policy that is paying carries on after SSP ends, until you return to work or the benefit period ends.

**Q: Can I claim income protection more than once?**

faq-id: can-i-claim-income-protection-more-than-once

Yes, an income protection policy can pay out more than once over its term, for separate periods of absence, provided the policy is still in force and each claim meets its terms. A limited benefit period applies to each claim, so a policy with a two-year limit can pay for up to two years on one claim and again on a later, separate claim. The policy terms set how the deferred period applies to a later claim and how a return of the same condition is treated.

**Q: Does income protection cover mental health conditions?**

faq-id: does-income-protection-cover-mental-health-conditions

Income protection can pay out for mental health conditions. It does not work from a list of conditions: it pays if any illness or injury stops you working, unless the policy excludes the condition. Mental health conditions and back problems are among the common causes of long absence that a policy covers unless they are excluded. Someone with a history of mental health problems may be offered cover with an exclusion for that history or at a higher premium, and the terms offered depend on how each insurer underwrites that history. Accurate answers on the application protect a later claim.

**Q: Does income protection cover redundancy?**

faq-id: does-income-protection-cover-redundancy

No, income protection pays when illness or injury stops you working, not when you lose your job. It replaces part of your income only while you are unable to work and the policy terms are met. Some mortgage payment protection policies add unemployment cover to illness and injury cover, but they pay only the mortgage payment, for a limited period the policy sets, and each policy defines what counts as unemployment. Check what a policy covers before relying on it for job loss.

**Q: What is mortgage payment protection insurance?**

faq-id: what-is-mortgage-payment-protection-insurance

Mortgage payment protection insurance is a shorter-term policy that pays your monthly mortgage payment if illness or injury stops you working, and some policies also pay on unemployment. It pays for a limited period set by the policy, such as one or two years, and covers only the mortgage payment. That makes it narrower than income protection, which replaces part of your income, can be spent on any outgoing and can pay for as long as its benefit period allows.

**Q: What affects the cost of income protection?**

faq-id: what-affects-the-cost-of-income-protection

Income protection premiums depend on your age, occupation, health and smoking status, and on the policy: the benefit amount, the deferred period, the occupation definition and the benefit period. A longer deferred period and a limited benefit period lower the premium, because the insurer pays later or for less time. Own occupation cover and a full-term benefit period raise it. The insurer cannot change a guaranteed premium except in the ways the policy sets out at the start, while it can change a reviewable premium at its reviews. Each insurer sets its own premiums.

**Q: Is income protection regulated?**

faq-id: is-income-protection-regulated

Yes. Income protection is a pure protection insurance contract, and firms that advise on or arrange it carry out insurance distribution, regulated by the Financial Conduct Authority under its Insurance: Conduct of Business sourcebook, known as ICOBS ([FCA Handbook: ICOBS 1.1](https://www.handbook.fca.org.uk/handbook/ICOBS/1/1.html)). The Prudential Regulation Authority also supervises insurers. When you apply you have a legal duty to take reasonable care not to misrepresent your health or circumstances, and a complaint the firm does not resolve can go to the Financial Ombudsman Service.

**Q: Can I get Statutory Sick Pay if I am self-employed?**

faq-id: can-i-get-statutory-sick-pay-if-i-am-self-employed

No, Statutory Sick Pay is paid by an employer to people classed as employees, so the self-employed cannot get it ([GOV.UK: Statutory Sick Pay eligibility](https://www.gov.uk/statutory-sick-pay/eligibility)). A contractor employed through an umbrella company is that company's employee, with the same employment rights as other employees. A self-employed person who cannot work may be able to apply for Universal Credit or Employment and Support Allowance. With no employer pay and no SSP, the self-employed lose their income from the first day of absence, so a short deferred period on income protection shortens the time they go without income.

## Talk it through with an adviser

Let’s talk property finance

## Contact us

**Call our team:** [+44 333 231 8206](tel:+443332318206)
**Email us:** [enquiries@mortgagelane.com](mailto:enquiries@mortgagelane.com)
**Opening hours:** Monday to Friday, 9am–6pm Closed Saturday and Sunday

Your enquiry goes to our team, who will get in touch to discuss your next steps.

Fields marked  are required.

First name

Last name

Email

Phone

What can we help with?    Residential mortgage  Remortgage  Buy to let  Bridging finance  Commercial  Something else

Tell us about your enquiry

I am happy to receive occasional mortgage news and rate updates.

Send enquiry

We use your details to respond to your enquiry and, if you opt in, send updates. See our [privacy policy](https://mortgagelane.com/privacy-policy).

Published: 2026-10-08

Last reviewed: 2026-10-08

Source: https://mortgagelane.com/insurance/income-protection