A young man is struggling with mental health whilst sat at a computer

Income Protection and Your Mental Health

By Vicki Coleman

We don’t have to tell you: it’s tough out there. From the rising cost of living to the climate crisis to the conflict in Ukraine, our post-pandemic world is challenging.

So it’s no wonder people’s mental health has suffered. A quarter of us are likely to experience a mental health problem of some kind over the course of any given year.

Luckily, the way we talk about mental health and wellbeing has come a long way. Over the last decade, huge steps have been made in raising awareness and reducing the stigma around mental health.

There’s still a long way to go, but with the spotlight on mental health, it’s important that industry does what it can to support people and their wellbeing. The insurance sector is particularly well-placed to do just that.

How does income protection support mental health?

One way insurers are supporting their customers is through income protection.

According to research by the Institute for Public Policy Research, 60% of people out of work because of long-term illness are living with a mental health problem.

Meanwhile, data published by Group Risk Development (GRiD) reveals that mental health is the second most common claim on group income protection (18%).

There are all sorts of reasons why someone may be forced to take time off work due to their mental health: stress, depression, anxiety, bipolar disorder or schizophrenia. But income protection places the emphasis on your inability to work, rather than the reason behind it.

Income protection policies provide you with a percentage of your income  - usually between 50% and 70% - until you are fit to return to work or the policy period ends.

Even if you have experienced mental illness in the past, most customers will be able to get protection. The majority of income protection policies do not have standard exclusions (other than most insurers will not cover you for pre-existing conditions).

Making time to reflect

The benefits income protection can offer means it should be at the heart of everyone’s financial planning. However it tends to lag behind life insurance and critical illness cover in popularity.

Often seen as a luxury protection product by consumers, they deem it a non-essential when it comes to budgeting. However, that couldn’t be further from the truth.

Arguably, income protection is the only insurance product that offers sufficient protection against mental health conditions or any other issue that leads to short-or long-term sick leave.

So what’s the issue? It has an image problem.

According to research from the Chartered Institute of Insurers, just 42% of consumers trust financial services companies. The rest think insurers will do everything they can not to pay out.

But the stats confirm that payout statistics are high. The average new claim amount for group income protection is £28,977 per annum. You can’t put a price on good mental health, but knowing your income is protected if you’re not in the right headspace to go to work is a good place to start.

Breaking down barriers

Another positive is knowing the industry is doing what it can to help customers who have experienced a mental health condition obtain cover.

Historically, customers have been reluctant to disclose mental health conditions to insurers. But this is changing - protecting yourself with income protection is more accessible than ever before.

Following the launch of the Association of British Insurers’ (ABI) Mental Health Standards in 2020, insurers have reimagined the underwriting process for protection products.

These standards have meant a simpler application process - questions are more straight-forward, language is easier to understand and more sensitive, and some applicants are given the option to tell their story in their own words.

All of which is good for everyone’s mental health. By knowing the right protection is in place, we can all benefit from greater peace of mind - and a boost to our mental health and wellbeing.

Is income protection a worthwhile investment?

Income protection is designed to give you financial certainty, whatever life throws at you.

But understanding which level of cover is right for you can be a minefield. But this is where QuoteSearch can help. We’re here to make the process as straight-forward as possible - you provide us with some details and we’ll do the rest.

Start comparing income protection insurance quotes via QuoteSearch today.