Uncertainty drives record numbers to take out income protection. Here’s what you need to know

Figures from the Association of British Insurers (ABI) suggest a record number of families are taking out income protection to create a safety net. Read on to find out how income protection works and whether it could be valuable for you.

Income protection would pay out a regular income if you were unable to work due to an accident or illness. As a result, it could provide you with a way to keep up with your financial commitments if your income unexpectedly stops. Income protection will normally continue to pay an income until you’re able to return to work, retire, or the term ends.

Usually, the sum provided through income protection is a proportion of your regular salary, such as 60%. You’ll need to pay a monthly premium to maintain the cover, the cost of which will depend on a range of factors, such as your age and lifestyle. While you might not want to increase your expenses, income protection could be cheaper than you think, and it may substantially improve your financial resilience. 

Economic uncertainty could be driving more people to consider their financial resilience

According to the ABI statistics, a record 247,000 people took out income protection in 2023. The figure is almost four times higher than it was just 10 years ago. Critical illness insurance, which would pay out a lump sum if you were diagnosed with a covered illness, saw a similar rise between 2013 and 2023.

Yvonne Braun, director of policy, long-term savings, health and protection at the ABI, said: “Financial resilience – the ability to withstand a financial shock – is a hugely important issue. It’s encouraging to see that so many people recognise that income protection and critical illness insurance are an important part of financial planning and play a crucial role in providing a financial safety net.”

There are many reasons why you might consider how to improve your financial safety net.

A change in your circumstances can often be a trigger. For example, if you’ve purchased a property or have welcomed children, you may reevaluate your finances and take steps to improve your ability to weather a financial shock.

Wider economic circumstances are also likely to have played a role in the rising number of households choosing to take out income protection.

Over the last few years, the Covid-19 pandemic and subsequent period of high inflation may have led to more families facing unexpected changes to their budget. Indeed, a BBC report suggests 7 million adults felt “heavily burdened” by their finances at the start of 2024.

With many families having to absorb higher essential costs, from energy bills to grocery shopping, it’s perhaps not surprising that more are looking for ways to ensure they can overcome losing their income. 

Income protection could safeguard your short- and long-term finances

If taking time off work might place pressure on your finances, it may be worth considering if income protection could be right for you.

It’s not just your income you may want to weigh up either. For example, your partner may be the main income earner in your household while you are responsible for the majority of childcare. In this scenario, you might want to consider how your household’s expenses would change if you were ill – your childcare bill could rise significantly or your partner might be forced to take time off work while you recover. 

Income protection could complement your wider financial safety net

While you may already have measures in place to provide a short-term income if you are unable to work, income protection could still be useful.

You may have an emergency fund you can draw on, but how long would it last, and what would happen if you were unable to work for longer than expected? Similarly, your employer might provide enhanced sick pay, but this is often for a defined period, such as six months. 

Assessing your financial resilience could help you see how income protection might complement your wider financial plan. 

A financial shock could affect your long-term finances too

When you experience a financial shock, your focus is likely to be on the immediate impact it has on your budget. Yet, it could have long-term implications too.

If you’re unable to work you might stop paying into your pension, or cut back how much you’re adding to a savings account. Depending on your circumstances, income protection could allow you to stick to your wider financial plan. It may help you to maintain non-essential outgoings that might be crucial for your long-term goals.   

Get in touch to discuss your financial resilience

Taking steps to improve your financial resilience could help you feel more confident about your future and mean you’re in a better position to overcome unexpected shocks. Please contact us to talk about your financial plan and whether income protection or other measures could be right for you. 

Please note:

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

Note that income protection plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.

Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.


    What our clients say

    The majority of my time has been spent running a business and concentrating on making the correct day-to-day decisions; it was essential for me to gain advice and guidance. Phill and his team at RPG have been able to guide me and provide a balanced portfolio. Without turning to RPG, I would have been unable to arrange my long-term financial future. They have a vast amount of knowledge and have produced the results essential for when I decide to retire.

    John S, Shropshire


    Because our business was growing every year, we didn't really look at how the money we were making was put to best use. We needed some expert advice to lead us in the right direction. Anthony O'Connor has always been very helpful and approachable whilst dealing with our affairs. We are left to do what we do best: run a business. We would highly recommend anybody who is seeking financial advice to look at the services Anthony and his team can provide.”

    John and Carole, Cheshire

    Business owners

    We decided to use Phill Owen to help us with our financial planning as our savings, mortgage and life policies did not seem coordinated. Phill provided a clear plan for the future. He helped us organise our wills, inheritance matters and our future retirement. With our face-to-face catchups and regular emails or phone calls, Phill has always given us sound advice. This, in turn, has given us the peace of mind that our financial matters, now and in the future, are in good hands and in good order.

    Nick and Christine, Shropshire

    Retired Dairy Consultant and Retired NHS Therapist

    I started using RPG on the advice of my bank when I started my own limited company. They have guided me through potential pitfalls in such a friendly manner that, even though our relationship has always been professional, I still consider them as friends. This journey has gone through setting up my company, tax, VAT, insurance advice, setting up wills, buying a different house and ensuring my wife and sons are provided for, both now and in the future. It has been such an easy journey. I would have no hesitation in recommending them to anyone.

    John M, Manchester

    Aircraft Engineer

    My wife and I have been clients of Phill's for 25 years; 20 of which were with RPG Chartered Financial Planners. 17 years were prior to retirement and nine years have been post-retirement. Their involvement has been crucial to dissipate our financial and estate management concerns. RPG’s staff have been exemplary; always approachable and quick to respond. We have no reason to believe that this tremendous working relationship will not be as successful in the future as it has been in the past. We have no hesitation in recommending them.

    Paul and Pat S

    Retired Veterinary Surgeon and Retired College Lecturer

    I am a Chartered Structural Engineer and have very little knowledge, experience or understanding of financial affairs and investments. Approximately six years ago I started to think about early retirement. For the past six years RPG have provided excellent financial planning and tax-efficient advice in the form of a combination of pension and cash ISA investments, which have grown significantly to such an extent that early retirement is imminent.

    Pete, Manchester

    Chartered Engineer

    Early in 2000, we decided we needed financial advice. We contacted Phillip Owen, who created a financial planning strategy that addressed all our needs. We were impressed with his advice, and so a partnership began that has lasted. Original goals are still being met and often exceeded, and investments are successful. There is long-term financial planning in place, even for the youngest family members. I highly recommend Phill and his team.

    Mike, Westminster

    Retired Teacher and Volunteer Sector Adviser

    We were in need of an adviser who could provide a wide spectrum of advice for managing our portfolio. We met Anthony on several occasions to understand his breadth of experience, and we were very impressed. Anthony's team took the reins in consolidating and rationalising our portfolio. We are very pleased with Anthony's service and we look forward to a long-lasting relationship with him.

    Atul and Nita, London

    IT Consultant & Accountant

    Anthony O’Connor has advised me over several years about pensions and general financial planning.  I have found him knowledgeable, supportive and a person who provides good solutions . He has a “can do “ approach and makes things happen.  I have recommended him to a number of friends and they are all happy with his support and advice  He is always good humoured which is a good quality when planning ones financial affairs.

    Geoffrey Smith, Manchester


    Get in touch