How and where to buy short-term income protection insurance

Money Advice Service

Short-term income protection (STIP) policy rates vary depending on the type and level of cover you’re looking for. Always take the time to make sure the policy you get is in line with your financial needs and competitively priced.

How much does it cost?

Not sure what something means? Have a look at our Protection insurance glossary.

Monthly payments (also known as premiums) for short-term income protection insurance depend on a range of factors.

These include:

  • age
  • waiting period before the policy starts to pay out
  • whether you smoke or have previously smoked
  • health (your current health, your weight, your family medical history)
  • job (some occupations carry a higher risk than others and might mean you have to pay more each month).

The amount of cover you need will depend on your circumstances. You should consider:

  • debts
  • take home pay
  • mortgage/rent
  • number of dependents.

How much cover do I need?

STIP protection policies are designed to pay out over a fixed amount of time, usually a year. They aim to bridge the gap until you can work again. If you’re concerned that you might not be able to work in the long-term, you might consider income protection insurance.

You can work out how much cover you need in three easy steps.

Step 1: First add up:

  • Your debts: these include your mortgage and any other debts which you might choose to have covered by the policy.
  • Expenses you want the insurance to cover: any essential monthly outgoings, such as bills, food shopping and child maintenance.

Step 2: Check what kind of cover you already have

For example, if you’re employed, your benefits package might include a certain amount of ‘sick pay’. Check your work contract or speak to your HR department for more information.

Step 3: Calculate the cover you need

When you have these two figures, take away the benefits or cover you already have from the amount you’ll need.

This figure represents how much you need to be covered for each month.

The amount of time you want to be covered for, also known as the term, depends on your situation.

Short-term income protection insurance example

Add up

John (42) and Judith (39) have a joint household income of £41,000 per year.

They have an outstanding mortgage of £213,000 which they expect to pay off in 18 years.

They also took out a £5,000 loan to purchase a car. Their basic monthly outgoings are £1,000 (£12,000 per year).

What you already have

Neither John nor Judith have a company sick pay scheme and would only be entitled to Statutory Sick Pay (£88.45 per week for up to 28 weeks) if they found themselves unable to work.

Calculate what you need

They decide that they need enough short-term income protection insurance to pay off the mortgage, car payments and living costs.

They take out a 12-month policy, which will cover 80% of their income, which covers the shortfall between their statutory sick pay and their outgoings as well as basic living costs.

Where to go for quotes

To find the best value, compare as many offers as possible.

You can get short-term income protection insurance quotes from:

  • banks
  • specialist brokers
  • credit card companies
  • independent financial advisers
  • retailers including major supermarkets
  • insurers that only seel direct (not through comparison sites)
  • comparison sites – make sure you use several to get a good picture of what’s available
  • your mortgage provider – you might be offered STIP after you take out a mortgage, but you might be able to find a better deal elsewhere.

Using a broker

If you’re unsure what level of cover is right for you, it’s a good idea to speak to a financial adviser.

These experts can help you find the right short-term income protection policy and might be able to secure it at a better price.

Find out more in our guide When to use an insurance broker.

Be honest about your medical history

In 2016, research from the ABI found that 97% of all protection insurance claims were paid out. Of those that didn’t pay out the majority failed to provide accurate information to their insurer.

When you sign up to a policy, it’s important that you answer all the question honestly and fully.

If you ever need to make a claim your insurer may look at your medical history and if you failed to share some information, or provided inaccurate details, they might not pay out.

Buying a life insurance policy

Read the small print

Read the small print to make sure you know what you’re buying. Find out what is and isn’t covered and ask the insurer, or your adviser to explain anything you don’t understand.

Changing your mind

Once you’ve bought an insurance policy you have 30 days to change your mind and get a full refund.

Keeping your cover up to date

It is important to keep an eye on your policy and make sure you update it in case of certain events.

Common reasons to add more cover include:

  • you’ve had another child
  • your partner has stopped working
  • you’ve taken out a new mortgage or car loan.

If you change jobs and your new benefits package includes a more generous ‘sick pay’ benefit, you may consider lowering your level of cover.

Do you need life insurance? This product will provide some financial support to your dependants if you die.

Do you need income protection insurance? This type of insurance provides regular payments if you’re unable to work due to illness or injury.

Do you need payment protection insurance? Also known as PPI, this product will help you keep making payments if you can’t work due to an illness, injury or if you’re made redundant.

Do you need critical illness insurance? This type of policy will provide you with a tax-free ‘lump sum’ if you’re diagnosed with a serious illness covered by your policy.

This article is provided by the Money Advice Service.

Some important information about Rest Less Money

We want you to understand the positives, but also the limitations of using our site. We operate in a journalistic manner and therefore all information, guidance or suggestions provided are intended to be general in nature, and you should not rely on any of the information on the site in connection with the making of any financial decision.

When we set out to build Rest Less Money, we wanted to be a trusted place where you could find helpful information about financial matters affecting the over 50s. As a free to use resource, we try hard to provide the best information we can, but we cannot guarantee that we won’t occasionally make mistakes. So please note that you use the information on our site at your own risk, and we can’t accept liability if things go wrong.

Key things to remember when using Rest Less Money:

We do not offer financial advice – As a journalistic site, it’s important to know that we do not provide financial advice. You should always do your own research before choosing any financial product so that you can be certain it is right for you and your specific circumstances. If you are in any doubt, please seek professional financial advice from a regulated financial advisor.

No Liability – please note that you use the information on Rest Less Money at your own risk and we can’t accept liability for how you choose to use the information given on our site. We will often provide links to content or products and services available on other third-party websites. These are provided purely for your convenience and we cannot be held responsible for any content, or any of the products and services offered on any website that we link to.


Accuracy of Information – We try to make sure that all the information provided on Rest Less Money is correct at the time of publishing as we want it to be the most helpful resource possible. Sadly, we are not perfect however, and so we can make no guarantees as to the completeness, accuracy, adequacy or suitability of the information available on the site.
Whilst we work hard to try and provide accurate information, deals and prices can change, so whilst they may be correct at the time of writing, providers may subsequently decide to alter them later – so always double check first.

A final note on the Rest Less Community Forums – always remember that anyone can post their opinion on the Rest Less Community Forums, so it can be very different from our own opinion and may not be factual or well researched. Always be wary of any content posted on the forums and be sure to do your own research and due diligence on anything suggested. 

We hope you find Rest Less Money a useful resource and we would welcome your feedback at [email protected] on how to make it even better. For more information on any of the above you can read our full terms and conditions.

Share on facebook
Share on twitter
Share on linkedin
Share on whatsapp
Share on email

Get the latest advice, news and inspiration

No spam. Just interesting and useful stuff, straight to your inbox. For free.

By providing us your email address you agree to receive emails and communications from us and acknowledge that your personal data will be used in accordance with our Privacy Policy. You can unsubscribe at any time by following the link in our emails.

Join the Rest Less Money Club

Sign up today to get early access. Coming soon.