If someone depends on your income, protection planning is not optional. It’s not something you’ll “get round to eventually.” It’s something you need now, because the thing you’re insuring against (death, illness, injury) doesn’t send a calendar invite first.
The good news? Protection products are simpler, cheaper, and more valuable than most people realise. The bad news? Most people don’t have enough. Or any.
Let’s fix that.
Life Assurance + Whole of Life
Life insurance is the simplest protection product there is. You pay a monthly premium. If you die during the policy term, it pays a lump sum to the people you care about. That’s it. No complicated conditions, no medical assessments at claim time (as long as you were honest on the application). You die, it pays.
Types of Life Insurance
Level Term Assurance
The sum assured stays the same throughout the policy. If you take out 500,000 of cover for 25 years, the payout is 500,000 whether you die in year 1 or year 24. Best for: general family protection, covering an interest-only mortgage, or providing a fixed financial safety net.
Average cost (2026): roughly 25 per month for 150,000 of level term cover, though this varies enormously with age, health, and smoking status.
Decreasing Term Assurance
The sum assured reduces over time, broadly in line with a repayment mortgage. As your mortgage balance goes down, so does the cover. Cheaper than level term because the insurer’s potential payout shrinks every year.
Average cost (2026): roughly 17 per month for 150,000 of decreasing term cover.
Best for: covering a repayment mortgage specifically.
Increasing Term Assurance
The sum assured increases each year, usually in line with inflation (RPI or a fixed percentage like 3%). Premiums increase too. Protects against inflation eroding the real value of your cover over a long term.
Family Income Benefit (FIB)
Instead of paying a lump sum, FIB pays a regular tax-free income to your family until the policy end date. If you die with 15 years left on the policy, your family gets 15 years of monthly payments. Die with 2 years left, they get 2 years.
Often better value than level term and easier for families to manage (a monthly income feels more natural than a huge lump sum sitting in a bank account).
Whole of Life Assurance
Covers you for your entire life. As long as you keep paying premiums, a payout is guaranteed whenever you die. This guarantee makes it significantly more expensive than term cover.
Whole of life is primarily used for:
- IHT planning (ensuring money is available to pay the inheritance tax bill)
- Funeral costs (a smaller policy to cover the immediate expense)
- Leaving a guaranteed legacy regardless of when you die
Premiums can be guaranteed (fixed for life) or reviewable (the insurer can increase them, sometimes dramatically, at review points). Reviewable premiums start cheaper but can become unaffordable. Guaranteed premiums cost more upfront but you know what you’re paying forever.
How Much Cover Do You Need?
The common rule of thumb is 10-15x your annual salary. But a proper calculation considers:
- Outstanding debts: mortgage balance, loans, credit cards
- Income replacement: how many years of your salary would your family need? (Consider until your youngest child finishes education)
- Childcare costs: if you’re the primary caregiver, replacement childcare is expensive
- Education costs: school or university fees if applicable
- Funeral costs: typically 4,000-6,000
- Subtract: existing cover (death in service from employer, other policies), savings, and the surviving partner’s income
Writing Life Insurance in Trust
This is one of the most important and most overlooked steps in protection planning.
If your life insurance is not in trust:
- The payout forms part of your estate
- It goes through probate (slow, 6-12 months)
- It could be subject to inheritance tax at 40% if your estate exceeds the nil-rate band (325,000, or 500,000 with the residence nil-rate band)
If your life insurance is written in trust:
- The payout goes directly to your named beneficiaries
- It bypasses probate (paid within weeks, not months)
- It’s outside your estate for IHT purposes
- It costs nothing to set up. Most insurers provide trust forms as part of the application
Writing a policy in trust takes minutes and costs nothing. Not doing it is one of the most common and most easily avoidable mistakes in financial planning.
Workplace Life Cover (Death in Service) and the LSDBA
Many employers provide group life assurance (death in service), typically 2-4x your salary. This is valuable but tied to your job. Leave the company, lose the cover.
Since the Lifetime Allowance was abolished in April 2024, pension death benefits are now tested against:
- Lump Sum Allowance (LSA): 268,275
- Lump Sum and Death Benefit Allowance (LSDBA): 1,073,100
Death in service lump sums paid from registered pension schemes count towards the LSDBA. If your combined pension death benefits exceed this, there could be a tax charge. For people with large pension pots AND generous death in service cover, this is worth monitoring.
Key Providers
The UK life insurance market is competitive. Major providers include Royal London, Aviva, Legal & General, LV=, Vitality, Zurich, and AIG Life. Premiums vary significantly between providers for the same person, so always compare or use a broker.
Vitality is worth a special mention: their policies reward healthy behaviour (exercise, health checks) with lower premiums and Vitality rewards. If you’re the type who actually uses a gym membership, it can offer genuine value.
Income Protection
If you can only afford one protection product, this should be it. Your ability to earn an income is your single greatest financial asset. Everything else (mortgage payments, bills, food, childcare, pension contributions) depends on it.
Income protection pays you a regular, tax-free monthly income if you can’t work due to illness or injury. Not a lump sum. An income. For as long as you’re unable to work, potentially all the way to retirement.
How It Works
- You choose a benefit amount (typically 50-70% of your gross income, or up to 60% after tax). Insurers won’t cover 100% because they want you to have an incentive to return to work
- You choose a deferred period (the waiting time before payments start): 4 weeks, 8 weeks, 13 weeks, 26 weeks, or 52 weeks. The longer you wait, the cheaper the premium. Match it to your employer’s sick pay duration
- You choose a benefit period: short-term (1-5 years) or long-term (to retirement age). Long-term is better protection but costs more
- If you become too ill or injured to work, after the deferred period, the insurer pays your benefit monthly until you recover, the policy ends, or you reach retirement age
The Occupation Definition (This Really Matters)
This is the single most important detail in any income protection policy. It determines what counts as “unable to work.”
Own occupation: the policy pays if you can’t do YOUR specific job. A surgeon who injures their hand can’t perform surgery, so they claim, even though they could theoretically work in a shop. This is the gold standard. Always try to get own occupation if you can.
Suited occupation: the policy pays if you can’t do a job suited to your education, training, and experience. The surgeon with an injured hand might not be able to claim because they could work as a medical consultant or lecturer. Weaker than own occupation.
Any occupation: the policy only pays if you can’t do ANY work at all. This is the weakest definition and the hardest to claim on. You’d essentially need to be unable to do any job whatsoever. Avoid if possible.
Own occupation costs more. It’s worth it. The difference in premium between own and any occupation is typically 10-30%, but the difference in the likelihood of a successful claim is enormous.
Guaranteed vs Reviewable Premiums
- Guaranteed premiums: fixed for the life of the policy. You know exactly what you’ll pay. More expensive upfront
- Reviewable premiums: the insurer can increase them at review points (typically every 5 years). Start cheaper but can become expensive as you age, particularly if the insurer’s claims experience worsens. You could end up paying significantly more later, or being forced to reduce cover when you most need it
For most people, guaranteed premiums are the safer choice. You’re buying certainty.
What It Doesn’t Cover
- Pre-existing conditions (declared at application) may be excluded
- Self-inflicted injuries
- Claims arising from drug or alcohol abuse (some policies)
- Cosmetic surgery complications
- War and terrorism (typically excluded)
Why Most People Don’t Have It (And Should)
Income protection is the most under-owned protection product in the UK. People insure their phones, their cars, and their holidays, but not the income that pays for all of those things.
The government provides Statutory Sick Pay (SSP) of 118.75 per week (2026/27) for up to 28 weeks. After that, you’re on your own. If your employer doesn’t provide enhanced sick pay, a serious illness or injury could leave you financially devastated within months.
Key Providers
Major providers include Royal London, Aviva, The Exeter, Vitality, LV=, and Legal & General. The Exeter is particularly well-regarded for self-employed cover and for their “Activities of Daily Living” definition which can be more generous than traditional occupation definitions for some people.
Critical Illness Cover (CIC)
Critical illness cover pays a one-off, tax-free lump sum if you’re diagnosed with a specified serious illness during the policy term. It’s not about dying. It’s about surviving something life-changing and having the money to deal with the aftermath.
What’s Covered?
Most policies cover 40-60+ conditions. Some newer policies cover over 100 (including children’s conditions if you have a family policy). The conditions that trigger the vast majority of claims are:
- Cancer (the most common claim by far, roughly 60-70% of all CIC claims)
- Heart attack
- Stroke
These three account for roughly 85% of all critical illness claims. Other covered conditions typically include: multiple sclerosis, kidney failure, organ transplants, coronary artery bypass surgery, Parkinson’s disease, Alzheimer’s disease, and loss of limbs or sight.
Severity Matters
Not all diagnoses trigger a claim. Policies have severity definitions. For cancer, for example:
- Advanced cancer: full payout
- Early-stage / low-grade cancer: may pay a reduced amount (partial payout) or nothing, depending on the policy
- Non-invasive cancers (carcinoma in situ): some policies pay a percentage (typically 25%), others exclude entirely
Read the policy definitions carefully. “Cancer cover” doesn’t mean “all cancers.”
Standalone vs Accelerated
Standalone CIC: a separate policy from your life insurance. If you claim for critical illness, the CIC pays out and your life insurance remains fully intact. More expensive but much better protection.
Accelerated CIC: combined with life insurance. If you claim for critical illness, it reduces (or uses up entirely) your life insurance payout. If you’re diagnosed with cancer and claim 200,000 of accelerated CIC, your life insurance cover reduces by 200,000. If you then die, your family gets less (or nothing). Cheaper, but you’re really only covered for one event.
If budget allows, standalone is always better.
What People Use the Money For
The lump sum is yours to spend however you choose:
- Pay off the mortgage (remove the biggest financial stress)
- Cover treatment costs not available on the NHS
- Adapt your home (if the illness causes disability)
- Replace lost income while you recover
- Take time off work without financial pressure
- Pay for childcare during treatment
Key Providers
Royal London, Aviva, Vitality, Legal & General, and LV= all offer strong CIC products. Vitality’s Seriously Ill Conditions Cover (their version of CIC) includes their wellness programme. Royal London is often praised for the breadth of conditions covered.
Mortgage Protection
Mortgage protection is simply life insurance designed to cover your outstanding mortgage. It’s not a separate product category; it’s a specific application of term assurance.
How It Works
For repayment mortgages: decreasing term assurance is the natural fit. As your mortgage balance decreases over time, the sum assured decreases in step. This keeps premiums lower because the insurer’s liability reduces each year.
For interest-only mortgages: level term assurance is needed because the mortgage balance stays the same throughout the term. The full amount needs to be covered until the capital is repaid.
For joint mortgages: a joint life policy (first death) covers both of you. If either person dies, the policy pays off the mortgage. Cheaper than two separate policies, but the surviving partner is then left without cover. Two individual policies cost more but provide better protection overall.
Do Lenders Require It?
Strictly speaking, most lenders don’t legally require you to have life insurance as a condition of the mortgage. But many strongly recommend it, and some (particularly for higher loan-to-value mortgages) effectively make it a condition. Even when they don’t, getting a mortgage without life cover is reckless if anyone depends on you.
Critical Illness on Top
Many people add critical illness cover to their mortgage protection policy (accelerated CIC). If you’re diagnosed with a covered condition, the policy pays off the mortgage while you’re still alive, removing the biggest financial pressure during treatment and recovery.
Private Medical Insurance (PMI)
PMI gets you seen faster, treated quicker, and usually in a private room with better food. That’s the sales pitch. The reality is more nuanced but still compelling for many people.
What PMI Covers
- Consultations and diagnostics (MRI, CT scans, blood tests) without NHS waiting times
- Surgery and treatment in private hospitals
- Cancer treatment (often including drugs not yet available on the NHS)
- Mental health treatment (increasingly included, with Aviva and Vitality leading here)
- Physiotherapy and rehabilitation
- Private rooms (no mixed wards, better facilities)
What PMI Typically Doesn’t Cover
- Pre-existing conditions (anything you had before the policy started, or within a “moratorium” period)
- GP visits (you still see your NHS GP for referrals in most cases)
- Cosmetic surgery (unless reconstructive after illness/injury)
- Chronic conditions (ongoing management of conditions like diabetes or arthritis; PMI covers acute episodes)
- Dental and optical (unless added as an extra or through a cash plan)
- Pregnancy and childbirth (routine maternity; complications may be covered)
Excess Options
Choosing a higher excess (the amount you pay before the insurer starts covering costs) can dramatically reduce premiums. Common options:
- Zero excess: most expensive premiums
- 250-500 excess: moderate saving
- 1,000+ excess: significant saving. You pay the first 1,000 of each claim year, the insurer covers everything above
- NHS fallback / six-week wait: you agree to use the NHS first if the wait is under 6 weeks. Only go private if the NHS wait exceeds 6 weeks. This can cut premiums by 30-50%
Premiums and Age
PMI premiums increase with age and claims history. A policy that costs 50 per month at 30 could cost 200+ per month at 60. Many people find premiums become unaffordable in retirement precisely when they’re most likely to need it.
Some providers offer no claims discount or premium protection” options. Vitality rewards healthy behaviour with lower PMI premiums.
Health Cash Plans: The Budget Alternative
If full PMI is too expensive, a health cash plan is worth considering. Cash plans reimburse everyday health costs:
- Dental check-ups and treatment (up to annual limits)
- Optical care (eye tests, glasses, contact lenses)
- Physiotherapy
- Osteopathy, chiropractic, acupuncture
- Health screenings
Providers include Medicash, Westfield Health, BHSF, and Simplyhealth. Plans typically cost 10-30 per month with annual claim limits per benefit.
Cash plans don’t replace PMI for serious illness. But for everyday health maintenance, they can pay for themselves quickly.
Key PMI Providers
Bupa (the biggest private health insurer in the UK), Aviva, AXA Health, Vitality, and WPA are the main players. Bupa and Vitality tend to dominate the individual market. Aviva and AXA Health are strong in the corporate space.
The Bottom Line
Personal protection isn’t glamorous. Nobody gets excited about paying premiums for something they hope they’ll never use. But that’s exactly the point. Protection products exist for the worst days of your life, and on those days, they’re worth every penny.
The priority order for most people:
- Income protection (your income pays for everything else)
- Life insurance (if anyone depends on your income)
- Critical illness cover (if budget allows, standalone)
- Mortgage protection (if not already covered by the above)
- PMI (nice to have, not essential)
And whatever you do, write your life insurance in trust. It takes five minutes. It costs nothing. And it could save your family tens of thousands in tax and months of probate delays.