Only 16% of full-time UK workers have income protection (IP) insurance, according to new research. That is up from 14% a year ago, but it leaves most working households without cover if illness or injury stops them earning.
The figures come from a survey of 2,000 UK adults carried out for Manchester-based mutual Shepherds Friendly.
The gap is widest among people with the most to lose. Of those without cover, 81% rent or have a mortgage, 44% have children under 17, and 28% are single, with no second income to fall back on.
Many workers have already felt the effect. More than one in five (20%) full-time workers aged 18 to 64 had experienced a period out of work without their usual earnings. That rose to 40% among those aged 18 to 24.
Looking ahead, 38% expected factors outside their control to hit their income within five years. The cost of living was the top concern, cited by 68%, followed by an economic downturn (60%), illness or a long-term health condition (51%), AI’s effect on job security (48%) and accidental injury (46%).
Most people know the product exists: 70% had heard of income protection. But understanding is patchy. Some 14% said they did not know what it covers. Among those without a policy, 41% wrongly believed it pays out on redundancy, and 49% thought lifestyle factors such as regular drinking, or existing health conditions, would automatically rule them out. That figure rose to 57% among 18 to 24-year-olds.
“The findings from this year’s research suggest that low Income Protection take-up is not primarily driven by a lack of awareness,” said Dan Simpson, chief commercial officer at Shepherds Friendly.
He said misconceptions about what the product does, worries about eligibility and doubts over its value were stopping consumers from engaging with protection conversations.
Price dominates. Some 43% of those without cover said it would be the most important factor when choosing a protection product.
Health and wellbeing benefits also appeal. Services to help diagnose conditions topped the list of desired features at 26%, alongside access to a virtual GP, up from 22% last year and rising to 34% among 25 to 34-year-olds. Cancer screening and physiotherapy access were joint second at 25%.
When asked what would get them talking to an adviser, 28% pointed to a free consultation and 22% to no broker fees. Nearly one in five (19%) said nothing would persuade them.
The findings come six months after the biggest reform of statutory sick pay in decades. Since April 6, SSP has been payable from the first day of sickness and extended to lower earners. But it is still paid at the lower of £123.25 a week or 80% of earnings, for up to 28 weeks.
For most full-time workers, that leaves a large gap between sick pay and their usual income, particularly after the first six months.
The research points to an education problem rather than an awareness one. Correcting the redundancy and eligibility myths, and explaining that many policies now come with health services such as virtual GPs, could move more clients to buy.
For commercial brokers, the figures support the case for group income protection. Employers looking to support staff wellbeing, or to retain staff in a tight labour market, can offer cover that most employees would never buy individually. Group schemes also avoid the individual underwriting that many workers wrongly fear would exclude them.
