January 21, 2020

3 reasons you should consider income protection as well as critical illness cover

Taking time off work due to an accident or medical problem can have both an emotional and financial impact, so ensuring you take out the right protection is crucial.

Government figures from 2014 revealed that, every year, almost a million workers in the UK are off work for a month or more due to illness. Taking time off work due to an accident or medical problem can have both an emotional and financial impact, so ensuring you take out the right protection is crucial.

There are two main ways that you can protect yourself against the financial impact of being off work due to illness or injury: critical illness cover, and income protection.

Critical illness cover tends to be more popular as many people have heard of this type of protection, partly because it is often recommended alongside life cover when someone takes out a new mortgage.

However, if you’re working in the healthcare sector, then income protection could also be extremely valuable. Here are three reasons why it could be as beneficial to you as critical illness protection.

1. Income protection is more than just a cash benefit

In 2018, the Association of British Insurers (ABI) reported that more than 25,800 income protection claims were paid by insurers. Almost £650 million in claims were paid, with the average claim being worth more than £22,000.

This compares to 16,452 critical illness claims, with an average payout of £70,925.

With almost nine in ten claims being paid, it’s clear that income protection is a valuable source of financial support for thousands of people who are unable to work.

Income protection is designed to replace lost income while you are off work through illness or injury. Definitions differ between providers, with some agreeing a claim if you’re prevented from carrying out your own job, while others will encourage you to return to work even if it is not your normal job, but another that you’re qualified to do.

After a chosen deferred period (often equivalent to the amount of full sick pay you receive from your employer), your policy will pay out a regular, tax-free monthly income equivalent to up to 70% of your gross (pre-tax) earnings. Note that some income protection policies may have a ‘cap’ on the maximum amount of income payable, and that tax rules may change in the future.

A good income protection contract will pay out long term and it is possible to claim as many times as you need to over the lifetime of the policy – up to the age you chose your policy to end.

Of course, the main benefit of income protection is that it will pay a monthly amount to you to enable you to pay your mortgage, rent or other living expenses. You can focus on your recovery with the peace of mind that income is coming in to pay your bills.

However, many income protection policies now offer more holistic benefits to help you to get your life back on track. For example, your policy may also offer rehabilitation support, additional treatment and back-to-work services. Many insurers partner with specialist firms in order to provide you with individual-focused all-round support to help aid your recovery.

Compare these benefits to that of a critical illness policy. Here, you’ll receive a lump sum if you’re diagnosed with an illness covered under your policy and you may receive additional support from your insurer. However, you’ll receive one payout and then the policy will end, so you can’t claim multiple times.

2. Your policy will cover mental health claims

A critical illness policy is designed to provide financial support in the event you’re diagnosed with a serious illness. The most common claims are for cancer, heart attack, stroke and multiple sclerosis.

While many critical illness policies offer excellent coverage, they typically won’t cover you if you have to take time off work due to a mental health problem such as stress or anxiety.

This is a particular issue for healthcare professionals who often have to take time off work due to overwork and under-staffing. Indeed, the Independent reported in August 2019 that mental health problems were the most common reason that NHS staff in England take sick days.

Income protection is, in this situation, a more valuable type of protection as it will provide financial support if you’re off work for an extended period as you recover from a mental health issue.

Indeed, the protection industry is seeing a rise in the number and value of mental health-related claims. In 2018, FT Adviser reported that mental health was the highest value cause of income protection claims for the insurer LV, amounting to nearly £5m for new and existing claimants.


Figures from leading insurer Aegon published in 2019 showed that mental health was the second most common reason for claims on an income protection policy in 2018. Almost a quarter of all claims were for mental health-related issues, second only to cancer.

Critical illness protection won’t support you if you’re off work due to stress, anxiety or depression. Often, it also won’t cover you if you’ve taken time off after being involved in an accident, or if you have a bad back or other musculoskeletal problems.

Income protection can provide the financial support you need if you’re forced to take time off work in any of these situations.

3. It means life can go on

The idea of financial protection is that you’ll receive the support you need so your life can go on as normally as possible. Just because you cannot work in your profession – whether that is through illness or accident – it doesn’t mean that your life should stop.

Income protection allows your family life to continue and for you to maintain your lifestyle as much as possible based on a similar level of income. The support you receive enables you to pay your mortgage and your monthly bills. It means you and your family can continue to live as you did before, taking holidays and so on rather than putting your life on hold.

Critical illness can also provide much of this financial support, albeit in the form of a lump sum rather than regular ‘income’ payments.

Get in touch

If you’re looking for the most appropriate way to provide financial peace of mind, we can help. We specialise in advising doctors, dentists, locums and other medical professionals, so please email info@medicalandgeneral.co.uk or call (01404) 515544 to find out more.

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