income protection
Statutory sick pay vs income protection
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This guide is for general educational purposes and is not financial advice. Cover, eligibility and terms vary by insurer and by policy. Always read the policy documents for the full terms, limitations and exclusions before you buy.
To deal with the challenge of paid sick leave, UK governments have tried various solutions. Statutory Sick Pay (SSP) was introduced in 1983 to replace state sickness benefits. It shifted the financial burden of short-term sick leave away from the state by placing a legal duty on employers to pay their employees a minimum level of sick pay.
SSP provides very modest support. It was reformed significantly in April 2026, and while those changes widened who can claim it, they did not make it generous. For most people it still falls a long way short of their normal earnings.
Long-term sickness remains a serious problem for the UK workforce and economy. Office for National Statistics figures put the number of people aged 16 to 64 who are economically inactive because of long-term sickness at around 2.75 million, close to the highest levels on record. Many of those people are self-employed and have never been eligible for SSP at all.
The current rate of Statutory Sick Pay is £123.25 a week, or 80% of your average weekly earnings, whichever is lower. Earnings are averaged over an eight-week period.
That 80% element is new. It exists so that SSP cannot exceed what a low-paid employee would normally have earned. If you earn more than about £154 a week, the flat rate of £123.25 is what applies.
How much you actually receive depends on the days you normally work, which are known as qualifying days. SSP is paid for the full days you are off sick that you would normally have worked.
If you usually work three days a week and you are unable to work for four weeks, you are paid for three qualifying days in each of those weeks, so twelve days in total rather than a full four weeks' worth.
If you have read about SSP before, two of the rules you may remember no longer apply. The Employment Rights Act reforms took effect on 6 April 2026 and changed the following.
So the current position is straightforward. To qualify for SSP you need to:
Agency workers may also be entitled. The self-employed are not.
The definition of sickness includes mental illness severe enough to prevent you doing your job. For absences of more than seven days in a row your employer can require a fit note from a doctor or other healthcare professional such as a nurse, pharmacist, occupational therapist or physiotherapist. For the first seven days you can normally self-certify.
Your employer must pay SSP for up to 28 weeks. After that it stops. Your employer should give you form SSP1, which you use to claim state support instead. The main options are New Style Employment and Support Allowance and Universal Credit, depending on your National Insurance record and household circumstances.
Twenty-eight weeks sounds like a long time until you are the one counting it. If your recovery runs past that point, SSP simply ends.
SSP is a legal minimum, not a target. Many employers pay more through a company sick pay scheme, and the terms should be set out in your contract of employment.
The most generous packages may carry you through a long absence comfortably. Others pay full salary for a few weeks and then drop straight to SSP. A significant number pay nothing above the statutory minimum at all.
Find out exactly what yours does, and for how long, because that single fact determines how you should set up any cover you buy alongside it. This is the detail that most people only discover when they need it.
Income protection insures you against losing your income when illness or injury stops you working. Because it replaces a meaningful proportion of your earnings, it does a fundamentally different job from SSP.
Two points before the detail. You need to take out a policy while you are fit and working: if you wait until you are already on sick leave, you will not be able to get cover. And unlike SSP, income protection is available to the self-employed as well as employees, which matters given how many long-term sick people fall outside the statutory system entirely.
If you have a health history you are worried about disclosing, that does not necessarily rule you out, though it may affect the terms you are offered. Our guide to income protection and pre-existing conditions covers how underwriters approach this.
Most UK income protection policies pay between 50% and 65% of gross income, as MoneyHelper sets out. Citizens Advice describes it as "about a half to two-thirds of your earnings before tax".
The cap is deliberate. Insurers do not offer to replace 100% of your earnings, because a benefit worth more than your salary would create an obvious problem.
This is the part that is almost always left out, and it changes the arithmetic completely.
Where you pay the premiums yourself from taxed income, the benefit is normally paid to you tax free. HMRC's guidance confirms the exemption under section 735 ITTOIA 2005, and notes that "there is no limit on the amount of payments that can be received free of tax".
So a policy paying 60% of gross salary is not replacing 60% of your standard of living. It is replacing 60% of your gross pay with money you keep in full, which typically works out much closer to your normal take-home pay. That is the comparison to make.
The position is different for employer-funded schemes, covered further down.
The deferred period, sometimes called the waiting period, is the gap between becoming unable to work and your first benefit payment. The common options are 4, 13, 26 and 52 weeks. A longer deferred period means a lower premium.
Note that you generally choose from your insurer's standard list rather than naming any number of weeks you like, which matters when you are trying to dovetail with company sick pay.
The benefit period is the maximum time a single claim can be paid. Short-term policies commonly pay for 1, 2 or 5 years; full-term policies pay until you can return to work or the policy ends, whichever comes first.
The benefit period only bites if you are off for longer than it lasts, so choose one you think is realistic. A longer benefit period costs more. As long as you keep paying premiums, most policies let you claim again for a new period of incapacity.
It is not an either-or choice. The two are designed to sit at different points on the timeline.
Rachel earns £2,500 a month gross, which is £30,000 a year, and takes home £2,000. Her employer pays the statutory minimum and nothing more. She has a policy paying 60% of gross with a four-week deferred period.
She is injured and is off work for 26 weeks.
Against a normal take-home of £2,000, the policy alone replaces three quarters of her spending power, and it does so because the benefit is not taxed. Add SSP and she is close to whole.
One caution worth building into your planning: policies differ on whether state benefits are taken into account. Some insurers set the maximum benefit after allowing for state support, and Citizens Advice notes that the typical half-to-two-thirds figure reflects this. Check how your policy treats SSP rather than assuming the two simply stack.
David has the same earnings, but his employer pays full salary for the first eight weeks of any absence. He is off work for 16 weeks.
There is no eight-week deferred period on most insurers' lists, so David has to choose either side of it. He picks 13 weeks, which keeps his premium lower.
Had he chosen a four-week deferred period instead, his cover would have started during the period his employer was still paying him in full, which most insurers will take into account. The lesson is to match the deferred period to the point your employer's support actually stops, choosing the nearest available option and understanding the consequence either way.
Work from the tax-free benefit, not the headline percentage, and compare it against your take-home pay rather than your gross salary.
If your employer runs its own sick pay scheme, be aware that money you receive from it is commonly taken into account by your insurer, unlike SSP in many policies. That does not make cover pointless, because employer schemes usually end long before your benefit period does. It just means the value sits in the later part of a long absence.
Decide the benefit period by reference to how long your employer would keep paying you and what would happen after that. If company sick pay stops at eight weeks and SSP stops at 28, a policy with a one-year benefit period covers a very different risk from one that pays to retirement.
Line the deferred period up with the point your income actually falls away.
Personal policies are relatively straightforward. Group schemes work differently.
An employer can simply pay you from its own funds while you are off sick, or it can fund sick leave through group income protection insurance. In that case the policy is owned by the employer, the insurer pays the benefit to the employer, and the employer pays it on to you through payroll.
The tax treatment follows from that structure: because it reaches you as earnings, it is taxed like earnings, with income tax and National Insurance deducted. This is the key difference from a personal policy funded from your own taxed income, where the benefit is normally received tax free.
Group schemes often pay out for long periods and typically involve little or no individual medical underwriting, which can make them valuable if your health history would complicate a personal application. Check how long the cover actually lasts, since some schemes have a limited payment period, and make your own arrangements if there is a gap.
Statutory Sick Pay is a genuine safety net, and the April 2026 reforms made it a wider one by removing the waiting days and the earnings threshold. But £123.25 a week for up to 28 weeks is a floor, not a replacement income.
Used well, income protection covers the two things SSP cannot: the shortfall between the statutory minimum and what you actually earn, and the period after week 28 when SSP stops altogether.
If Statutory Sick Pay is not enough, there is another way.
This guide is for general information and is not financial, tax or legal advice. SSP rates and rules change, and policy features, definitions and tax treatment vary by insurer and by individual circumstances. Always check the current position on GOV.UK, read the policy documents and consider speaking to a regulated adviser before you buy.
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