Income Protection Cover Calculator

How much income protection cover do I need?

Income protection insurance pays you a regular, tax-free monthly benefit if illness or injury stops you working. The hard part is deciding how much cover to buy. Insurers cap the benefit you can insure – usually between 50% and 65% of your gross salary – because the payout is tax-free and they do not want it to exceed your normal take-home pay. This calculator works out the maximum monthly benefit you could insure, the equivalent gross salary that tax-free sum replaces, a suggested benefit to cover your essential bills, and a sensible deferred (waiting) period based on your employer sick pay and savings. It also shows the monthly gap left by Statutory Sick Pay (SSP) – just £123.25 a week for up to 28 weeks in 2026/27 – which is what income protection is designed to fill. It is built for UK employees and the self-employed who want a realistic cover figure before requesting quotes. No personal premium quote is given; figures are estimates for planning only.

How it works

The calculator uses four steps:

• Maximum insurable benefit = gross salary × your chosen cap (default 60%), divided by 12 for a monthly figure. Most insurers allow 50–65% of gross because the benefit is paid tax-free.
• Equivalent gross salary grosses the tax-free benefit back up through 2026/27 Income Tax (20%/40%/45%) and National Insurance (8% then 2%) so you can compare it with your normal salary.
• Suggested benefit is the lower of your essential monthly outgoings and the maximum you can insure – there is no point paying for cover above the cap.
• Deferred period is matched to how long you could survive without the benefit: weeks of full employer sick pay plus the weeks your savings would cover your essentials. A longer wait (4, 8, 13, 26 or 52 weeks) means cheaper premiums.

Worked example

Priya earns £40,000 gross, has essential outgoings of £1,500 a month, gets 4 weeks of full employer sick pay and holds £5,000 in savings. At a 60% cap her maximum insurable benefit is £40,000 × 60% = £24,000 a year, or £2,000 a month. Because that £24,000 is tax-free, it is worth roughly a £28,400 taxable salary. Her essentials (£1,500) sit below the cap, so a £1,500/month benefit is suggested. SSP would give her about £534.08 a month, leaving a gap of £965.92. Her 4 weeks of sick pay plus savings (about 14 weeks of essentials) cover roughly 18 weeks, so a 13-week deferred period is recommended to keep premiums down.

Frequently asked questions

How much income protection can I insure?

Most UK insurers let you cover 50% to 65% of your gross salary, with 60% a common maximum. The benefit is capped this way because it is paid tax-free, so a 60% benefit can be close to your normal net take-home pay.

Is income protection benefit taxed?

Personal income protection paid for from your own taxed income is paid out tax-free. That is why the insurable amount is capped below 100% of gross – the tax-free benefit is designed to roughly match your usual take-home pay.

What deferred period should I choose?

The deferred period is the wait between being unable to work and the benefit starting. Match it to how long your employer sick pay and savings can support you – commonly 4, 8, 13, 26 or 52 weeks. A longer deferred period noticeably reduces premiums.

How does Statutory Sick Pay affect this?

SSP is £123.25 a week for up to 28 weeks in 2026/27 and is paid by your employer if you qualify. For most households that is far below essential outgoings, so income protection is used to cover the shortfall once sick pay and SSP run out.

Source: Statutory Sick Pay rate and duration from GOV.UK – Statutory Sick Pay; Income Tax and National Insurance bands for 2026/27 from GOV.UK – Income Tax rates. Cover-cap percentages reflect standard ABI/insurer underwriting conventions.