Income Protection: Buy Cover for the Month Your Savings Run Out

Illustration, not a forecast: £2,000 a month of essentials needs £6,000 for three months, £12,000 for six and £24,000 for twelve if no other income comes in. The chart assumes zero sick pay, zero savings interest and no insurance payout; real cash need falls if other income continues. A £6,000 pot bridges three months, not a year. That is why the emergency-fund guide and protection solve different parts of the same problem.

The GOV.UK SSP page says eligible employees receive £123.25 a week or 80% of normal weekly earnings, whichever is lower, for up to 28 weeks. That is not a replacement salary; it is also not available to everyone. Eligibility depends on employee status and other conditions. Do not assume a self-employed person receives SSP.

An income-protection policy is not an instant cash transfer. Legal & General describes waiting periods of 4, 8, 13, 26 or 52 weeks for its Income Protection Benefit; accepted benefits are paid monthly in arrears. If you choose 13 weeks, hold enough liquid cash to pay bills through the wait and first payment, not only to the date the waiting period ends. Read the actual contract: other insurers differ.

That suggests a two-layer design: cash for the first weeks, cover for a qualifying long illness. The ABI describes protection insurance as a safety net, not a savings product. A policy is most valuable precisely when the time off work exceeds what you could reasonably stockpile. For the opposite view, read the case for self-insuring.

L&G’s current product description covers inability to work due to illness or injury, not redundancy; it also calculates the benefit using income just before incapacity, caps benefit relative to income and requires medical and financial evidence for claims. Its stated 60% of gross income on the first £60,000 is a maximum for that product, not a promise to replace all your take-home pay. Check pre-existing conditions, occupation definition, exclusions, benefit term and whether employer sick pay reduces what you can claim. Do not count an illustration as an accepted claim.

A 26-week wait can reduce a premium quote but also moves six months of risk back to your cash. Get personal quotes for several waiting periods; no premium figure here is a verified quote. Choosing a lower monthly benefit may leave more room for premiums while still covering non-negotiable bills.

Write a one-page timeline before signing: last day of full employer pay, first day of half pay, end of statutory entitlement if eligible, chosen policy deferral date and earliest possible first benefit payment. A policy that begins paying only after your cash is exhausted leaves a funding gap during assessment and the payment-in-arrears month. Keep essential bills, not your previous gross salary, as the minimum target. If the employer offers group cover, ask whether changing jobs ends it: a future employer is not obliged to replicate today’s benefit. Document what the household would cut immediately, and keep the waiting-period reserve outside volatile investments.

If rent, childcare and debt payments depend on one wage, reserve size alone tells you very little: the harder question is how long you can rebuild the reserve while ill. Take your employer handbook, any group income-protection certificate and your after-tax budget to an independent adviser or insurer. Compare the first date the employer pays less with the policy waiting period.

If you already have extended employer sick pay and an independent second income, buying the same protection twice can waste money. Read the existing income protection explainer for policy mechanics and the opposing cash-first argument before buying. The Bank of England’s 3.75% Bank Rate as checked on 27 September 2026 is not an easy-access savings quote or an insurance return; never use it to offset a fabricated premium.

Ask for a personalised quote that specifies the precise waiting period, end date and definition of being unable to work. Keep the insurer’s written exclusions beside your employment contract. If a cheaper policy stops paying after a short fixed period, it does not solve the multi-year risk this argument is about. A low premium for the wrong occupation test is not value. Review cover after a pay rise, a new dependant or a change in sick-pay terms; the original benefit amount need not continue to fit the household.