Short-term income protection: 1 or 2 years
Short-term income protection policies (sometimes called "budget" or "accident and sickness" cover) pay out for a maximum of 1 or 2 years per claim. After that period, payments stop even if you're still unable to work.
Short-term IP is significantly cheaper than long-term cover. It suits people who:
- Have some savings or assets to fall back on
- Are in the early stages of their career with limited budget
- Want some protection while they build up financial resilience
Long-term income protection: to retirement
Long-term income protection pays out until you return to work, reach the end of the policy term (usually retirement age), or die — whichever comes first. This is the "gold standard" of income protection.
What happens at the end of the policy term?
The policy term ends when you reach a specified age — typically 60, 65, or 67 (state pension age). At that point, no further premiums are due and no further claims can be made. If you retire before the term ends, some policies allow you to stop payments early.
Can a claim last indefinitely?
With a long-term policy, yes — payments can continue from the deferred period end date until your retirement age, provided your inability to work continues throughout that time. For very serious conditions, this can mean 30+ years of monthly payments.
Which is right for you?
If budget allows, long-term cover is almost always better value over a lifetime. If budget is tight, a short-term policy is a sensible starting point — you can often upgrade to long-term cover later (though you'll be older and possibly less healthy, which affects pricing).
Frequently Asked Questions
No — income protection pays until you recover and return to work, or until the policy end date (usually retirement age). It's not a life insurance product.
Yes — with most long-term policies, you can make multiple claims throughout the policy term (subject to the deferred period each time). Each new inability to work triggers a new claim.