Why do More of us Insure Our Mobile Phones, our Dishwashers, and our Dogs Than our own Incomes?

Income protection is a type of insurance that provides a replacement regular income if you are unable to work due to long-term illness, accident, or disability.

It typically pays 50-60% of your previous gross income, and normally starts after 6 months off work. It will continue until you are either able to return to work, retirement, or death.

Although it is one of the most important types of cover to have, less than one in ten of the UK’s working population has this type of cover (1), leaving 90% of us open to a massive risk.

The one protection policy that every working adult in the UK should consider is the very one most of us don’t have - income protection..


What Do We Insure Today?

The figures for the percentage of UK households that are covered by each type of insurance reveal massive disparities.

Comparison of insurance types by percentage of UK households with cover

Comparison of insurance types by percentage of UK households with cover

Insurance protection pays up to 60% of your previous earnings, which can cover all the essentials, like mortgage, groceries, utilities, as well as the material goods, gadgets, and entertainment needs of most families.

Consider the impact on your lifestyle if you lose your mobile phone, or if your home contents are damaged. Compare that to the consequences if you do not have insurance protection, and you suffer an illness, accident, or disability that means you are unable to work again.

The fact is, you are four times more likely to suffer a critical illness than die before 65 (3).

Yet – over three times more of us have Life Insurance than Income Protection (34% have life cover, but under 10% have income protection).

Why do we think it is more important to insure our mobile phone, washing machine, or dog than our own family’s livelihood?

The three most common reasons given are:

  • “It’s expensive”

  • “It won’t happen to me”

  • “I’m covered by state benefits”

Sadly, when you look at the facts, none of these reasons really makes sense.

Reason 1: “It’s Expensive”

Insurance protection and life insurance policies pay out far more than other types of insurance.

Still, three times more of us insure against losing our mobile phones than our own income. Many of us pay a few pounds a month to insure a mobile, or a new appliance like a washing machine. But, when you look at the likely payout, these small amounts do not look like such good investments.

See what happens if we compare the typical annual premiums for typical payouts across the same range of insurance products above.

Comparison of typical UK insurance premiums to payouts

Comparison of typical UK insurance premiums to payouts

In other words:

  • A mobile phone insurance claim pays out a tiny 2.7x the annual premium.

  • A pet insurance claim pays out a pathetic 3.4x the annual premium.

  • home contents insurance claim (in the case of theft) pays out 10x the annual premium.

  • home contents insurance claim (in the case of fire) pays out 46.5x the annual premium.

Compare to life and income protection…

  • An income protection insurance claim pays out a 104.8x the annual premium.

  • life insurance claim pays out 406x the annual premium.

But because you are four times more likely to get a critical illness than to die before the age of 65, this makes the payouts roughly equivalent, and both significantly better than the other types of insurance.

The bottom line is, if you are insuring your phone, your pet, or your house contents – but not your own income – that is a relatively poor investment in your and your family’s future.

The question to ask is not, “Can I afford income protection?” but “Can I afford not to have income protection?”

Reason 2: “It Won’t Happen to Me”

One in four men and one in five women will suffer some kind of critical illness before the age of 65.

Consider just three causes of critical illness. (Note: These are not even the most common causes of income protection claims.  Musculoskeletal and stress/mental health problems both account for more successful claims than these three.)


  • 33% of people will be diagnosed with some sort of cancer in their lifetime. That’s one out of every three of us.

  • Approximately 50% of cancer sufferers between 25 and 44 survive at least three years.

Heart Attack

  • Every year 300,000 people in the UK suffer a heart attack. That’s just under one in two hundred of the whole UK population – every year.

  • Around fifty percent of heart attack victims will survive.


  • Every year 150,000 people in the UK suffer a stroke. That’s almost one in every four hundred people – every year.

  • A third of all strokes happen to people under 65.

  • More than half of the one million stroke survivors in the UK today have to live with disabilities caused by a stroke.

Nobody likes to think about the worst that can happen. But the worst is happening every day.

32 men out of every 100 will suffer a critical illness between 40 and 70. (There are already plans to increase retirement age for men to 68(4), and this is only likely to increase.)

Out of those 32 men:

  • 15 will develop cancer

  • 10 will have a heart attack

  • 5 will suffer a stroke

  • 2 will have coronary artery bypass surgery (5)

Reason 3: “I’m Covered by State Benefits”

That may be true, but only if you are on a low income now.

  • The short-term lower rate of benefit is £74.80 (under pensionable age), or £95.15.

  • The short-term higher rate of benefit is £88.55 (under pensionable age), or £99.15.

  • The long-term basic rate of benefit is £99.15 (only applicable under pensionable age) (6).

So, assuming you are under pension age now, the amount of support you will get from the Government is unlikely to be over £400 per month.

Is that enough to cover all your outgoings, if you are unable to work?

In summary, we would advise any wage earner seriously to consider protecting their family’s well being with both life insurance and income protection insurance.

As always if you have any questions or comment on the points made in this article then don’t hesitate to contact us here at Reid, Scott, Ross. We’re only a phone call or an e-mail away!


  1. http://ask.unum.co.uk/
  2. http://www.which.co.uk/money/insurance/guides/protection-insurance-explained/income-protection/
  3. Office of National Statistics
  4. http://www.direct.gov.uk/en/Nl1/Newsroom/SpendingReview/DG_192159
  5. http://www.healthinsuranceguide.co.uk/statistics_mainbody.asp
  6. http://www.direct.gov.uk/en/disabledpeople/financialsupport/dg_10011925