Short-term vs long-term income protection

Income protection policies can either pay out for a fixed period or continue until you reach retirement age. The right choice depends on how long you could realistically manage without income, how much you’re willing to pay in premiums, and how important long-term financial stability is to you and your family.

Short-term income protection

Short-term income protection provides cover for a limited period — usually 12, 18, or 24 months per claim. Once the benefit period ends, payments stop even if you’re still unable to work. These policies are typically cheaper and can suit people who have significant savings, supportive employers, or a partner’s income to rely on. They can also work well as an affordable safety net for contractors and freelancers who only need short-term protection between contracts.

The main drawback is that a short-term plan won’t help if you develop a long-lasting illness or disability. For example, conditions such as chronic fatigue, depression, or back problems can keep people off work for several years. Once the benefit term ends, you’d need to fall back on savings or other financial support.

Long-term income protection

Long-term income protection pays a regular benefit until you’re able to return to work, reach your chosen retirement age, or pass away — whichever comes first. It provides much greater financial security, particularly for those whose household relies on a single income or whose profession would be difficult to resume after a major illness.

Although premiums are higher, long-term policies remove the uncertainty of how long you’d be covered. For limited company directors, this is often the preferred option. A company-funded executive plan can insure up to around 80% of your salary and dividends, ensuring the business can keep paying you indefinitely while you recover. For sole traders or freelancers, personal long-term cover provides a similar safety net, paying a tax-free monthly benefit directly to you for as long as needed.

Which is right for you?

Short-term cover may be enough if you have a strong savings buffer or want to protect yourself only against short-term setbacks such as an accident or short illness. Long-term cover is generally better for anyone with dependants, a mortgage, or limited savings — or where losing income for years would cause lasting financial harm.

If cost is a concern, one option is to start with a long-term policy but extend the deferred period (the waiting time before payments begin) to reduce premiums. Alternatively, you can combine short-term and long-term cover to balance affordability with ongoing protection. For help estimating the right benefit amount and duration, see how much income protection do you need?.

An independent financial adviser can help you compare both types, model different claim scenarios, and decide what level and duration of cover best fit your income and lifestyle. To explore live prices from trusted UK providers, you can get a quote online.