UK Income Protection Market Report 2025

The income protection market has shown strong resilience during the cost of living crisis, with sales of new individual policies reaching new heights in 2024. Growth have been fuelled by rising consumer awareness of financial vulnerability and increasing pressure on public healthcare systems.

Affordability continues to be the biggest hurdle for insurers looking to expand the customer base for income protection, and is a threat to retention. A perceived lack of affordability is the most common reason given by workers who don’t have income protection, while half of existing policyholders are considering cancelling their cover. Providers must work harder to showcase the value of income protection, especially as household budgets are under strain.

There is significant growth potential among underserved groups, such as renters and self-employed individuals. Many in these groups are worried about their financial stability during extended sick leave. Tailored education efforts and flexible solutions designed for their specific needs could open up new opportunities.

This report looks at the following areas:

Interest in income protection is growing as consumers seek to safeguard finances in the face of ongoing financial uncertainty, but cost concerns remain.

Charlie Landsborough
Financial Services Analyst

Market Definitions

For the purposes of this Report, Mintel has used the following definitions:

• Income protection: Typically, a long-term policy designed to replace a proportion of lost earnings in the event that the policyholder is unable to work due to sickness, accident or injury. Subject to certain conditions and level of cover, the insurer will pay, after a pre-agreed deferral period (eg four, eight, 13, 26, 52 weeks), a tax-free monthly benefit to the policyholder if they are too ill to work. The amount will usually be equivalent to between 50% and 65% (but can be up to 75%) of the individual’s gross earnings and is paid until the policyholder reaches their selected retirement age (usually between 50 and 70), or their recovery or death if these are sooner. Some lower cost policies will pay out for a set term (eg 2-5 years). Monthly premiums are determined via a detailed and personalised underwriting approach and are usually fixed for the term of the policy unless the policy is index-linked. The longer the deferred period selected, the lower the premium. This type of cover is also known as permanent health insurance or family income benefit and can be held jointly. It should not be confused with ASU insurance (see below).
• Accident, sickness and unemployment insurance: ASU is designed to provide cover for accidental death, disability and sickness, as well as unemployment, for a limited period. In the event of a claim, benefits are typically paid out on a monthly basis for a maximum of up to one or two years (unlike with an income protection policy, which is designed to pay out until the insured’s specified retirement age). As with other types of insurance, cover can be extended to a partner and/or children. This product is sometimes marketed as a form of short-term ‘income protection’.
• Personal accident and sickness insurance: Same as ASU described above but excluding cover for redundancy.
• Unemployment cover: Provides short-term cover in the event of redundancy or other involuntary unemployment.
• Mortgage payment protection insurance: A short-term insurance policy specifically designed to cover the policyholder against the inability to make monthly mortgage repayments due to accident, sickness and/or unemployment. The policy will pay out for a fixed period, usually a maximum of 12 months.
• Critical illness cover: A long-term policy designed to pay a lump sum to the policyholder on the diagnosis of certain life-threatening but not necessarily fatal conditions such as heart attack, stroke, certain cancers, multiple sclerosis, loss of limbs, etc. It can be bought on its own (ie as a standalone policy) or as an addition (ie as a ‘rider benefit’) to other types of insurance, notably term assurance, whole-of-life and endowment.
• Life insurance: A long-term policy that pays out a lump sum in the event of the policyholder’s death, with the purpose of protecting dependents against financial hardship. It is usually available on a single or joint life basis, with benefits including paying out on the diagnosis of a terminal illness. There are two main types of life insurance: term provides cover for a fixed term and only pays out if the policyholder dies within that term (providing cover for a set number of years and only pays out if the policyholder dies within that term), and whole-of-life (designed to cover the policyholder for the whole of their life, and as such guarantees always to pau.