When it comes to financial protection, how much is really enough? Life insurance and income protection are both designed to provide support to your family/loved ones in times of need. However, they both work in different ways.
We'll explore the key differences between these types of protection and whether they can be combined. Let’s break it down.
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What is life insurance?
Life insurance is designed to provide your beneficiaries with a lump sum payment in the event of your death. Each month, you pay a monthly premium to your insurer to remain covered.
It can be ideal for protecting any dependants who rely on your income to get by. The main purpose of life insurance is to ensure that your loved ones are financially supported after you’re gone.
There are two main types of cover:
Term life insurance: This policy provides cover for a set period of time (usually between 5-50 years). If you pass away during this term, your insurer pays out a lump sum. If not, the policy expires.
Whole life insurance: Also known as ‘life assurance’. Unlike term insurance, whole life insurance offers cover for the insured's entire lifetime, as long as premiums are paid.
The cost of your premiums will depend on how much cover you require, as well as factors such as your age and health. Learn more about how life insurance works.
Please note: The insurance products offered by Cavendish Online have no cash-in value at any time. If you stop paying your premiums your cover will stop, your policy will end, and you will receive no benefit. If you have not claimed before the end of your chosen policy term, the policy will end, and no benefit will be paid.
If you experience financial difficulty and can no longer pay your premiums, please contact your insurer before cancelling your policy and before it lapses automatically as they may have options available to stop you losing the plan.
What is income protection?
Income protection insurance is a product specifically designed to support you financially if you are unable to work due to illness or injury. When the policy is triggered, it pays out a percentage of your monthly salary (typically between 50-70%) so you can maintain your standard of living.
This type of cover could help you pay for essential expenses, such as mortgage payments, utility bills, and groceries, even when you are unable to work.
Income protection policies vary in terms of cover, which can range from a few months to retirement, depending on the policy terms. It also comes with a waiting period known as a 'deferred period'.
There are a few types of income protection policies available:
Short-term income protection: Designed for those with temporary work absences, such as injury or illness, that do not require long recovery times. It can provide a portion of your income during the recovery period, helping you cover essential expenses like mortgage payments and bills.
Long-term income protection: Offers cover for extended periods, sometimes until retirement age. These policies are ideal if you are concerned about significant health issues that could lead to a lengthy absence from work.
What is the difference between life insurance and income protection?
The main difference between life insurance and income protection is in the way they provide financial support and the circumstances under which they pay out.
Life insurance pays out when you die (pending a successful claim), whereas income protection acts as a replacement of your regular income if you are unable to work (pending a successful claim).
The same can be said for the payout structure. Life insurance is usually paid out as a lump sum of which your family/loved ones can use as they see fit — whether to cover debts, living expenses, funeral costs, or any other obligations left behind.
Income protection, however, pays out as a percentage of your income, typically on a monthly basis, providing ongoing support to you during your recovery period or until you're able to return to work.
This income could help you and your loved ones maintain their standard of living, settle monthly bills, and manage daily expenses.
Can you get life insurance and income protection together?
Income protection can be purchased as a separate policy on its own or alongside a life insurance policy.
When combined, you'll have the benefit of being covered by life insurance as well as having income protection alongside it. This approach can also mean you have comprehensive financial protection for both long-term security and short-term income needs.
It may cost more in premiums each month, but you will have the benefit of being protected in either scenario.
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Why should I have life insurance?
What would happen to your family if you passed away unexpectedly? Would they have enough support to get by? If not, life insurance could be a great investment.
On its own, life cover is great for giving your family peace of mind, helping them remain financially secure in the event of your death. The money from your policy could be used for all sorts of purposes, which makes it a versatile tool.
It could be used to pay off outstanding debts, such as a mortgage or personal loans, or to cover your funeral expenses. If you have a term policy, you can tailor the length of the policy to match your goals and circumstances.
Why should I have Income Protection Insurance?
Illness and injury can happen at any time, perhaps as likely as death. A serious illness or injury could leave you unable to work for a lengthy period. While you may receive sick pay from your employer it may not be enough to cover your household income.
Without a steady income, everyday expenses and bills can quickly pile up, adding stress to an already challenging situation. Having income protection cover means that you won't have to dip into savings or rely on external help, such as borrowing money or family support, to stay afloat.
Why should you have both?
Life is unpredictable — whether it’s illness, injury, or worse, your finances can take a serious hit. That’s why having both life insurance and income protection can be a smart move, but whether you need both depends on your circumstances.
If you're young, single, and don’t have a mortgage or dependents, life insurance might not be a top priority. However, income protection could still be worth considering — especially if you work in a high-risk job where an injury could leave you unable to earn.
On the other hand, if you have a mortgage, a family, or a partner who relies on your income, both types of cover can provide essential financial security. Life insurance can help your loved ones if something happens to you, while income protection helps you keep up with everyday expenses if you’re unable to work.
By having both, you’re covering all bases — protecting your family’s future while also making sure you can manage financially if things go wrong.
Before making a decision, it’s worth speaking to a specialist to compare the cost of combined policies versus separate plans. In some cases, purchasing them individually might be the more cost-effective option.
Get advice on life insurance and income protection
Before you commit to a policy, it’s worth getting advice, especially if you are unsure about your options.
At Cavendish Online, our team of helpful advisers is well-equipped to guide you through the intricacies of life insurance and income protection options. They can offer personalised advice tailored to your specific needs and financial situation.
With our support, we can help you understand the nuances of each type of insurance and explain the benefits and limitations of different policies.
01392 436 193
(Monday to Friday, 9am - 5.30pm)
How to Apply for Life Insurance with Cavendish Online
Route 1: Quote & apply online
For the lowest premiums, you can quote and apply for life insurance entirely online. This option allows you to make all the decisions yourself and potentially be covered within 30 minutes.
Select this route if you:
Know exactly what you need
Are generally in good health
Are confident in writing your policy in trust
Route 2: Quote & apply with guidance
If you'd prefer to speak to someone over the phone, our life insurance specialists are available to help you decide. With their guidance, you could also be covered within 30 minutes.
Select this route if you:
Need help selecting the right policy
Are generally in good health or have minor health issues
Call our team today on
01392 241 850
(Monday to Thursday 10am – 7pm, Friday 10am – 6pm)
to speak with one of our advisers and receive tailored support throughout the process.
Route 3
Recommended for those with medical disclosures or hazardous occupations, we can help you find the most suitable and affordable policy to suit your needs.
Select this route if you:
Would like an adviser to recommend the right life insurance policy for you
Currently have or previously have had a medical condition/s whether well managed or not
Currently have or plan to take up a dangerous occupation or hobby
Call the Cavendish Online team today on:
01392 436 193
(Monday to Thursday 9am – 5.30pm, Friday 9am – 5pm)
How can I buy income protection insurance through Cavendish Online?
You can quote and apply for income protection by speaking to one of our expert protection advisers over the phone. There are no upfront fees to speak to the team and receive a quote. Simply call the Cavendish Online team today on:
01392 436193
(Monday to Thursday 9am – 5.30pm, Friday 9am – 5pm)
Unlike standard life insurance policies, income protection is a more complex product. To ensure you receive the most suitable cover for your needs, we believe the best way to buy income protection is by speaking with our experienced advisers.
Our team will guide you through the entire process, from providing a tailored quote to completing your application and beyond.
