Income Protection Calculator
If illness or injury stopped your pay, income protection replaces part of your salary until you recover or retire. See the monthly benefit you'd need and the most an insurer will cover.
Last updated 4 July 2026 · Written and reviewed by Mustafa Bilgic
Income protection calculator
The monthly benefit you need, and the most you can insure.
A guide to sizing cover, not financial advice. Insurers cap benefits at roughly 60% of gross income.
What income protection does
Income protection insurance pays you a regular, tax-free monthly income if you can't work because of illness or injury. Unlike a lump-sum policy, it keeps paying — until you recover, the policy ends, or you retire — so it's the cornerstone of protecting a household that depends on your earnings. The two decisions that shape both the usefulness and the cost are the monthly benefit and the deferred period before payments start.
On a £35,000 salary with £1,800 of essential monthly outgoings, aim to cover the £1,800 you'd need to keep the household running. Insurers will cover up to about 60% of gross income — here roughly £1,750 a month — so your need and the maximum are well matched.
How much cover you need
Start with your essential monthly outgoings — mortgage or rent, bills, food, minimum debt payments — rather than your whole salary, since discretionary spending can pause. Subtract any income that would continue, such as a partner's earnings or benefits. That gap is the benefit to aim for. Insurers cap the benefit at around 60% of your gross income because the payout is tax-free, so you can't insure your full salary. Our take-home pay calculator and budget calculator help you pin down the real number.
The deferred period
The deferred period is how long you wait after being unable to work before the benefit starts — commonly 4, 13, 26 or 52 weeks. A longer wait means cheaper premiums, so set it to match how long your employer sick pay and savings could keep you going. If you get three months of full sick pay, a 13-week deferred period avoids paying for cover you don't need. Statutory Sick Pay alone is modest — see our statutory sick pay calculator — so don't overestimate the safety net.
| Choice | Effect |
|---|---|
| Higher benefit | More cover, higher premium (max ~60% of gross) |
| Longer deferred period | Cheaper, but you self-fund for longer |
| Full-term cover | Pays until retirement if needed — the gold standard |
| Short-term cover | Pays for 1–2 years per claim — cheaper |
Full-term vs short-term
Full-term (long-term) income protection keeps paying until you recover or reach the policy's end date, which could be decades — the most robust cover. Short-term policies pay for a limited period, often one or two years per claim, and are cheaper but leave a gap if you're off work long-term. For most people protecting a mortgage and family, full-term cover with a longer deferred period gives the best value.
How it fits with other cover
Income protection handles the ongoing loss of earnings; life insurance handles death, and critical-illness cover pays a lump sum on diagnosis of a serious condition. They solve different problems, and many households need a mix. If you're self-employed with no sick pay at all, income protection is especially important — model your earnings first with our self-employed tax calculator. Always check the policy's definition of incapacity ("own occupation" is the strongest) before buying.
Frequently asked questions
How much income protection can I get?
Insurers typically cover up to around 60% of your gross income, because the benefit is paid tax-free. On a £35,000 salary that's roughly £1,750 a month. You should aim to cover your essential outgoings, which usually falls within this limit.
What is a deferred period?
The deferred period is the wait between becoming unable to work and the benefit starting — commonly 4, 13, 26 or 52 weeks. A longer deferred period lowers the premium, so match it to how long your sick pay and savings could support you before cover kicks in.
Is income protection benefit taxed?
No. Payouts from a personal income protection policy are paid tax-free, which is why insurers limit the benefit to around 60% of your gross salary — roughly your normal take-home pay. Employer-arranged group schemes can be taxed differently.
What's the difference between full-term and short-term cover?
Full-term income protection pays until you recover or the policy ends, potentially for years. Short-term cover pays for a limited period, often one or two years per claim, and is cheaper. Full-term offers the strongest protection against long-term illness.
Do I need income protection if I'm self-employed?
Often yes — arguably more than an employee, because you have no employer sick pay and Statutory Sick Pay isn't available to the self-employed. Income protection can replace lost earnings if illness stops you working, which is vital when your income depends entirely on you.