These products solve different problems. Confusing them leaves gaps while you are alive — or after you are gone.
| Income protection | Life insurance | |
|---|---|---|
| Pays when | You are ill or injured and cannot work | You die (or sometimes terminal diagnosis) |
| Beneficiary | You (monthly income) | Dependents or estate |
| Typical term | Until retirement age | Fixed years matching mortgage/family |
| Tax | Usually tax-free if you paid premiums | Usually tax-free payout |
Income protection in practice
Pays a percentage of pre-tax income after a deferred period — often 4, 8, or 13 weeks. Own-occupation definitions pay if you cannot do your specific job; any-occupation definitions are harder to claim. Read the definition carefully if you have a specialist trade.
Life cover in practice
Pays a lump sum or family income benefit on death. Critical illness cover is a third product — paying on diagnosis of listed conditions while alive. Some bundles mix life with critical illness; claims on one may reduce the other.
Employer sick pay runs out. Statutory sick pay is modest. Income protection fills the gap life cover never touches.
Who needs what first?
Sole earners with dependents often need both. Dual-income households with strong sick pay may prioritise life cover and a smaller income protection deferral. Renters without dependents might focus on income protection before life cover.
Check employer benefits before buying duplicate cover.