Welcome to our Income Protection Calculator hub. While we often find it hard to imagine a significant illness or injury happening to us, the sobering fact is that every working-age person in the UK is roughly 33%-40% likely to become too ill to earn an income for at least 3 months of their career, and often much longer.
Income protection cover pays a regular monthly income if you can't work due to illness or injury. This can bring substantial peace of mind for people of any age, whether you’re employed, or self-employed. With our specialist calculator below, you can work out how much income protection, and see how your benefit would pay out over time.
What is an Income Protection calculator?
A Income Protection calculator typically helps people to determine how much insurance cover they need to take out by calculating the income gap between sick pay (if you are entitled to it) and your essential living costs.
The difference between these two amounts are considered your essential living costs. This allows you to ensure you take out a policy that allows you to continue to live roughly the same lifestyle, if you become unable to earn a living.
However, our calculator goes a step further than most, as it can also show you the size of payout you would likely receive each month on your chosen level of cover. It can even provide a good estimate of how an increasing cover policy, which is the most common type, would increase year by year, in line with the cost of living.
How does this calculator work?
First of all, the calculator needs to determine your income gap. To get this, you’ll need to input:
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Your current income - Most insurers limit payouts to 50-70% of your gross salary to encourage a return to work.The actual cap depends on the insurer and policy type
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Your essential monthly outgoings - Such as mortgage/rent, utilities and debts, childcare etc
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Any sick pay you would receive - This may be employer sick pay, statutory sick pay, or none, if you don’t think you would be entitled to any. This may apply to some self-employed workers
You then need to input your chosen type of income protection policy. This could be:
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Increasing Cover: The benefit rises each year (typically by a fixed percentage) to ensure your payout keeps up with the cost of living. This is the most common choice because it protects your income against inflation over the life of the policy
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Level Cover: The monthly benefit stays the same for the duration of any claim. Simpler and usually cheaper, but does not rise with inflation, meaning that over time, it is less likely to keep up with your essential outgoings
You can also enter:
Your chosen deferral period: This is the waiting time before your policy starts paying out. A longer deferral means lower premiums, but you'll need other funds to cover the gap. Some people choose longer deferral periods if they have full employee sick pay for the first 6 months, for example
A sample claim duration: It’s difficult to predict how long you might be off work if you don’t know if or how you might get sick. However, this can be useful to give you a guide of how benefits would be paid out for up to 10 years. It’s defaulted to rise by 4% per year, however you can manually adjust the rate of increase to reflect your chosen policy
Calculating your payout
Using the income gap between any sick pay entered and your essential living costs, and taking into account your current salary and any deferral period you enter, the calculator will show you
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A breakdown of your income gap
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Your minimum cover amount to continue living as you currently do
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Your chosen deferral period
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How much your estimated payments would be over the duration of your claim, based on your chosen sample claim period
Please note: These figures are estimates to help you plan. Actual premiums and benefits will depend on your age, health, occupation, and the specific insurer.
How accurate are the results?
Although our calculator is a very useful starting point for your initial research, all online calculators have their limitations. as there are so many potential personal variables and income protection plans to consider. All online calculators only produce rough estimates. For bespoke calculations that are personal to you, get in touch to speak to an expert protection adviser.
However, they can be an incredibly effective tool for estimating roughly how much cover you need and what your payouts might look like.
You could also use the calculator to:
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Compare the payouts of increasing cover vs. level cover income protection
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Compare different deferral periods and how they would impact your payouts
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Comparing different lengths of incapacity, perhaps useful if you are at higher risk of certain illness or job-related injuries, and how this would impact your payouts
Get 100% independent insurance advice
Example Calculations
Scenario 1: The young professional
This user is a 30-year-old renter in a low-risk office job. They have minimal savings and want a policy that kicks in quickly if they are unable to work, focusing on a short-term (1-year benefit period) policy to keep costs low.
|
Category |
The young professional |
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Annual Gross Salary |
£35,000 |
|
Cover Percentage |
65% |
|
Monthly Benefit |
£1,895 (level cover) |
|
Deferred Period |
30 Days |
Scenario 2: The Self-employed tradesperson
A 40-year-old self-employed electrician. Because they have no employer sick pay, they need a long-term policy that provides a safety net until retirement. They choose a longer waiting period to reduce the monthly premium cost and have some savings.
|
Category |
The Self-employed tradesperson |
|
Annual Gross Salary |
£45,000 |
|
Cover Percentage |
60% |
|
Monthly Benefit |
£2,250 (level cover) |
|
Deferred Period |
13 Weeks |
In this scenario, the total monthly payout on a level cover policy until they return to work or retirement would be £2,250. However, on an increasing cover policy this would rise annually by the percentage set by the particular insurer.
Scenario 3: The high-earning corporate executive
A 45-year-old Director with high mortgage commitments and private school fees. They require the maximum possible cover to maintain their family's lifestyle indefinitely.
|
Category |
The high-earning corporate executive |
|
Annual Gross Salary |
£120,000 |
|
Cover Percentage |
70% (typically the maximum available) |
|
Monthly Benefit |
£7,000 |
|
Deferred Period |
26 Weeks to align with employer sick pay period |
The impact of deferred periods
This table shows how choosing different deferral periods impacts the estimated monthly cost of a policy for a 35-year-old seeking a £2,000 monthly benefit:
|
Deferred Period |
Estimated Monthly Premium |
|
30 Days |
£16 – £40 |
|
60 Days |
£13 – £32 |
|
90 Days |
£10 – £25 |
|
26 Weeks |
£6 – £15 |
What to do after running your calculations
Our income protection calculator is a great place to start for some quick estimates, but bespoke calculations tailored to your own individual circumstances will ensure your quotes are as accurate as possible.
Our expert protection insurance advisers can also provide expert advice about all forms of protection insurance to ensure you get the right cover. They also have direct relationships with insurers across the market, meaning they can often find you deals that are not advertised elsewhere.
Ready to take advantage of a free, no-obligation chat with an advisor who specialises in income protection advice? Get started here.
FAQs
Most insurers limit your monthly payouts to between 50% and 70% of your gross salary. This limit is set to provide a financial safety net while still offering an incentive for you to eventually return to work. The exact percentage you are eligible for will depend on the specific insurance provider and the type of policy you select.