For most UK workers, their ability to earn an income is their single greatest financial asset. Yet many workers insure their cars, mobile phones and household items while leaving their wages completely unprotected.
Whether you work in construction, healthcare, manufacturing, transport, retail, logistics, administration or professional services, losing your income due to illness, injury or unexpected redundancy can create significant financial hardship within weeks.
Income protection insurance and Accident, Sickness and Unemployment (ASU) cover are designed to provide a financial safety net when life takes an unexpected turn. Depending on the policy selected, cover can help replace a proportion of your income if you are unable to work due to illness or injury, while some policies can also provide protection against compulsory redundancy.
Two workers, two very different outcomes
Worker A – No protection
David earns £35,000 per year and works as a skilled tradesperson.
Following a serious back injury at work, he is unable to work for six months. His employer provides only statutory sick pay. Mortgage payments, council tax, utility bills, fuel costs and food shopping continue as normal.
Within a few months:
- Savings are exhausted
- Credit card balances increase
- Mortgage arrears begin to develop
- Financial stress impacts recovery
- Family finances become strained
David’s focus shifts from recovery to simply trying to survive financially.
Worker B – Protected
Sarah earns a similar salary and has income protection insurance.
After suffering a serious illness, she is unable to work for several months. Her policy pays a percentage of her income each month while she recovers. Many policies are designed to replace a portion of earnings until the policyholder returns to work or reaches retirement age, depending on the cover selected.
As a result:
- Mortgage and rent payments continue
- Household bills remain manageable
- Savings remain largely intact
- Recovery becomes the priority
- Financial anxiety is significantly reduced
The illness is the same. The difference is financial preparedness.
Why workers should consider protection
Many households rely heavily on a single wage. If that wage suddenly disappears, the impact can be immediate.
Income protection can provide assistance when workers are unable to work because of:
- Serious illness
- Long-term sickness
- Workplace injuries
- Accidents outside work
- Mental health conditions that prevent working
- Recovery following surgery
Most policies focus on your ability to perform your occupation rather than specific medical diagnoses.
What about redundancy?
This is where workers need to understand an important distinction.
Standard income protection policies generally cover illness and injury only and do not usually cover redundancy. Workers who want protection against compulsory redundancy should investigate Accident, Sickness and Unemployment (ASU) cover or specific unemployment protection policies.
Many unemployment and redundancy protection products can provide between 50% and 70% of normal income for a temporary period while a worker searches for new employment.
For workers with mortgages, rent commitments and families to support, this can provide valuable breathing space during a difficult period.
Providers workers may wish to investigate
The Workers Union does not endorse any specific provider. Workers should always obtain independent financial advice and compare policies carefully.
Some well-known providers and comparison services include:
- Aviva
- Legal & General
- Vitality
- British Friendly
- Liverpool Victoria
- co.uk
- Compare The Market
- MoneySuperMarket
- Which?
TIP
- When comparing policies, workers should pay particular attention to:
- Percentage of salary covered
- Waiting period before payments begin
- Maximum claim period
- Own occupation definitions
- Mental health cover
- Rehabilitation support
- Redundancy inclusion or exclusion
- Policy exclusions
The Workers Union view
Workers often spend years building careers, supporting families and paying mortgages without considering what would happen if their income suddenly stopped.
No insurance policy can remove the stress of illness, injury or redundancy. However, the right protection can prevent a temporary setback becoming a long-term financial crisis.
For many workers, income protection is not about preparing for the worst. It is about protecting everything they have worked hard to build.
In a world where household budgets are already stretched, safeguarding your income may be one of the most important financial decisions a worker ever makes.
