Disability insurance

April 2024  

Disability Insurance In April 2024 

Long term disability insurance is one type of income protection insurance.On average  disabilities cause affected people to be away from the desk for an average of 3 years. 

What is more, 25% of 20-29 year olds have a fair risk of experiencing a disability at some stage in their working life. These statistics, from the Council for Disability Awareness, can cause concern. 

If you could not work for a significant length of time, how would you cope financially? If you are unsure, it might be worth looking into insurance.

Topics that you will find covered on this page

What exactly is disability insurance?

A  disability insurance policy can help with a long or short term disability. A disability could result from sickness, an injury, or an accident. If individuals are left unable to work, basic living costs can become problematic.

Disability policies are one form of income protection insurance that helps those unable to work. If unable to work, long term disability insurance policies support you by paying between 50-70% of your salary. Essentially, they give a monthly benefit that replaces a large portion of your salary!

You can get both short term disability insurance or long term disability insurance. Some disability insurance cover is included in employee benefits, but employers generally only offer a short term benefits package. 

Regardless check what your workplace cover you for, and the benefit amount, before getting a quote. 

What is covered by disability insurance?

If you experience disabilities that take you out of the work place, they are normally covered by your insurer. These might be illnesses like cancer, or injuries from falls and car accidents.

The exception is accidents at work, these are normally not covered. This doesn’t mean you won’t get anything though. Instead  these will be covered by workers’ compensation insurance. 

Essentially, any illness or injury that causes disability is eligible for a payout. Unless, of course, your policy has exemptions in the terms- so check the fine print of the contract.  

Having a professional scrutinise the terms and conditions of different quotes is a wise move. An expert adviser can also explain what  providers offer the best support and services for you. 

Here is a video discussing disability insurance. 

Is long term care paid for by this service?

Treatment and rehabilitation can both cost a lot. However, the monthly benefit disability insurance provides is intended to replace lost earnings, only. Unfortunately, these specific insurance payments are not designed to fund any long term care. 

The good thing is there are other sources of financial protection out there for those that are concerned about treatment costs.

Experts can point you in the rich direction for providers for these alternative policies, such as a Lifetime Care Plan from Aviva. 

For how long will my policy last me?

Essentially, you will need to discuss this with your provider. 

There are cases when the policy will pay out until an employee is of retirement age.  it can be more expensive, but very helpful if you are never able to make it back to work.

Typically, a policy lasts for anything from 2 to 10 years. Benefits will continue to be paid until you return to work. If you do not return, they stop when the policy ends. 

What differences are there between short term vs long term disability coverage?

  • Short term coverage pays benefits for anything from 30 days to a year.  It is designed to help you out if you run out of statutory sick pay.  However, if you are out of work for a long time it won’t cover you for it all.  However, more serious health problems could leave you out of work, and needing your disability benefit, for a longer length of time. 
  • Long term disability insurance will provide you with disability benefits for anything from 2-10 years. Sometimes, it might even pay benefits for life. For this reason, it is a more costly disability policy.

The upshot is, you get more of a safety net with long term disability insurance, but you do pay for it. This cost can be worth it though. For example, you might want to consider long-term cover if:

  • You are the main breadwinner
  • You need to support your family
  • You could not afford your cost of living if you lost your salary, you might want to consider this option.
  • You  have little savings
  • You would have no one to turn to for financial support

Will I pay tax on benefits received?

Monthly benefits from long term disability insurance are not normally  tax-free. The only time they might not be taxed is when you pay your own long term disability insurance premium. 

If you have an employment package then, sometimes, arrangements are made to free your policy from taxes.

An advisor can help you in this situation, though cannot guarantee in any instance that you can be exempt from paying the tax.

disablement insurance

How do I get disability insurance?

Getting insurance is fairly straight forward, but be sure to get it right. Firstly, question your current employer to see what they offer the workforce. They might offer cover, but check whether your contract states short or long term. 

It is not uncommon for an employer to offer no disability insurance. Other times you might still want  independent cover, e.g. if the cover offered through work has limitations.

I already have a disability, can I get insured?

You are still entitled to take out and receive policy benefits if you already have a disability. Bear in mind, though, that insurance companies tend not to cover an existing condition. 

Your existing conditions will be taken into consideration by your insurer when pricing up quotes for you. Based on your risks the insurer then chooses what to cover and what discrepancies to put into effect in your policy. 

So, when you make your initial application you must disclose all details of your disability. There will be a section on the form specifically for this.  People that fail to share details of their pre-existing disability find their disablement insurance void and future claims made rejected . 

What are the benefits of disability insurance?

After being out of work for a long time, your sick pay entitlement eventually ends.

People with dependents such as elderly relatives and children, or large outgoings like a mortgage on a house, a regular income is crucial. This is especially true if its not just a short term disability.

Disability insurance gives a program of regular payments. This ensures those who need it can still get a regular income.

For many, this is superior to critical illness cover which is more limited and only pays out the once. 

What are the alternatives?

Many people have a  job role that does not give any, or sufficient, disability insurance. But, there are options out there if you do not want independent disability cover. These are:

  • Making regular investments into a savings plan. If you ever need a replacement income you then have a stash of cash ready and waiting. 
  • Taking out other types of independent health insurance. One popular option is critical illness cover.
  • Seeing what state benefits you would be entitled to should you be out of work. 
disability insurance cover

Is disability insurance or critical illness cover better? 

What is critical illness cover (CIC)? 

This is a plan that pays out a one-off lump sum in events of serious illness.Normally there is a set list of eligible conditions, specified by your provider. 

It differs from disability insurance because rather than getting a regular income over the period you are out of work for, you get one lump sum payment. 

What type of protection should I get?

This really depends in part on your circumstances and also future risks. 

CIC is not just for employees, and the payout can be spent on anything. It might give you more than simply a replacement income. However, it just pays out once. So, whether you are financially better off depends on how long you can’t work for.

If you dont have great budgeting ability CIC may not be a good idea for you, as if you do not return to work you need to make your lump sum last. 

Disability insurance might be better for accident cover or if you still have big financial commitments. Many people with outstanding mortgage payments for their home prefer regular payments. 

That said, CIC might be better in the event you experience a major health diagnosis or complication. Remember though, this specific condition has to be covered by CIC. 

If your life insurance policy has CIC in it as a bundle,you might already be insured by an incapacity to work benefit. This knowledge could change your decision, so check the terms of any existing cover you have.

If you still need protection, representatives from both types of providers can help you figure out the type of cover that is best for you. 

term disability insurance

I’m self-employed: can I get insurance?

Self-employed workers can experience huge financial loss if they have an injury or illness. Not only can they not work, but they can’t claim sick pay

If you are a self-employed individual then long term disability insurance can help offer security. 

You will be eligible for insurance so long as:

  1. You work a minimum of 16 hours on a weekly basis 
  2. You can provide sufficient evidence of your income/finances from jobs

Is disability insurance based on income?

The payment value is a percentage of your job’s salary. So, the exact amount you get depends on the level of cover you have and your wage. 

Typically the cover will range from 50-70% of the salary, depending on your chosen policy. 

Whilst you might be tempted to choose the highest level of cover, remember this and other factors affect premiums. 

What is the average cost of disability insurance?

In the UK, people find themselves paying between  £20 and £100 per month. This varies with ones lifestyle and specific policy requirements. 

So, before getting a policy you need to decide on the disability benefits you wish to receive if you become disabled. You also need to choose a deferment period and policy term length. 

There are guides out there to help you estimate your cost. Your accident insurance is inevitably going to be more expensive if you work in high-risk occupations. 

Remember, insurers will also want to look at your medical records. Pre-existing health conditions must be stated and normally raise premiums. 

What is a deferment  or elimination period?

The definition of this is the time between disability onset and the first benefit payment. In simple terms, it is how long you wait before your payments start. 

You might think you want a short deferment period, but remember it will influence your premiums. A longer elimination period gives cheaper premium offers. But if you do not have savings or people to help out, a long period of deferment might not be feasible.

You should consider the following questions:

  • Do you have any savings you could access? 
  • Do you have debts to pay off?
  • Do you have a mortgage?  
  • Do people rely on you financially? 
  • Do you have anyone that could give you temporary financial support?

Also check the length of standard sick leave at your office. This period will have you covered by statutory sick pay. So, you likely won’t need long term disability insurance benefits to kick in until sick pay comes to an end.

Where can I purchase my insurance?

Popular providers in the UK are Aviva, The Exeter, Legal and General, Royal London, and Vitality. 

However, there are many providers out there. They all have different deals. So, shop the market carefully. 

It is wise to chat about your needs and options with an independent adviser. Also, double check that your workplace doesn’t offer group disability insurance for you as a worker. There’s always a chance they might.

When in life is the best time to buy cover?

Long term disability insurance premiums are cheaper when you are younger. Essentially, this is because an accident/injury/illness is much less likely to make you become disabled when younger. 

If you have reviewable premiums they will rise with inflation as you age. But guaranteed premiums are fixed. 

So, if you are going for guaranteed premiums, getting a policy young can be a good idea. This is because you will lock in cheap premiums with an insurance company.

It does, however, mean you might end up paying more in the long run. The majority of people never have to go through the claims process. 

So, you have to make the choice: do you want to take a plan out earlier and have cheaper premiums? Or, do you want to start cover later, and pay higher premiums but perhaps less in the long run?

Expert advice can explain when it might be best for you to start long term disability insurance. An expert will consider your risk of an incident based on a variety of factors, including occupation and lifestyle. 

More useful articles related to health insurance

Whole Life insurance

In the UK choosing life insurance policies can create issues and confusion. Whole life insurance will cover you no matter when you die, but this comes at a cost. Keep reading to discover whether this might be right for you.

family income benefit

Family income benefit guarantees your loved ones a regular monthly income. The policy is one of three main types of life insurance, and often these life insurance policies have lower premiums.

Permanent health insurance

Permanent health insurance is one type of protection available for your wages. A PHI policy offers financial protection and peace of mind, in the event that you suffer an illness or disability that takes you out of work.

group income protection

Group Income Protection (gip) gives employees a replacement income. So, it is taken out by companies as an employee benefit, and gives salary protection insurance. 

disability insurance

A  disability insurance policy can help with a long or short term disability. A disability could result from sickness, an injury, or an accident. If individuals are left unable to work, basic living costs can become problematic.

Endowment policy

An endowment plan is a type of life insurance policy but one that doubles up as an investment fund.   Read more about how they worka and if they are suitable for you below.

Meet the author

Rob Atherton

Rob Atherton

Rob writes and edits the content produced by the rest of the team. He has a degree in History from Leeds University and has producing, reviewing and editing the site since 2016

Meet The Team

UK Care Guide - A trusted resource, as seen on

Share this page