Most of us insure our car or our home without a second thought, but our income and our life are usually worth far more, and often go unprotected. Income protection, life insurance and critical illness cover each guard against a different risk, and few people need all three at once.

This short guide walks through what each one does, its pros and cons, and how to work out what fits your circumstances.

Income protection insurance

Pays 50–65% of your salary if you can’t work due to illness/injury, after a waiting period:

• Pros: Covers the most statistically likely risk; state benefits alone (roughly £70–£100+/week) won’t cover living costs.
• Cons: Only replaces part of your income; premiums still due during the waiting period.

Life insurance

Pays your dependants a lump sum (term/whole-of-life) or income (family income benefit) if you die:

• Pros: Term assurance is the cheapest form; decreasing term can match a mortgage balance; can be written into trust for IHT purposes.
• Cons: Term cover pays nothing if you outlive the term; whole-of-life premiums are much higher and typically rise every 10 years.

 Critical illness cover

Pays a tax-free lump sum on diagnosis of a serious illness (from a defined list):

• Pros: Lump sum can clear a mortgage or fund treatment.
• Cons: Only covers listed conditions; coverage varies significantly by provider – always check this.

Do you need all three?

Not necessarily, it depends on your life stage:

• Young adult, no dependants: income protection first (most likely risk, no one relying on a death payout).
• Homeowner: critical illness to cover the mortgage.
• Parents: add life insurance for family protection.
• Later years: need for both typically falls as you clear mortgage and children become independent; IHT planning may take priority.

Pricing generally depends on sum assured/income level, term, and your age/health/lifestyle,. so it varies by individual.

Other considerations

• Check existing cover first (employer death-in-service or income protection benefits).
• Use rule of thumb: 10x highest earner’s salary plus debts for life/critical illness; add up essential outgoings for income protection.
• Disclose everything to your insurer; most declined claims stem from non-disclosure, not insurer reluctance (97.9% of claims were paid in 2025 according to the ABI).
• Check exclusions, medical exam requirements, and what happens if you can’t keep paying, before buying.
• Review after life events: house move, new job, marriage/divorce, children, debt repayment, health changes.

Why protection matters

Taking out life assurance or critical illness cover could be one of the most valuable pieces of financial planning you ever do. If you need it, it’s invaluable.

If you’ve got a question about protecting you or your family, please do get in touch with us.