Income Replacement Calculator
How much income cover you actually need is not simply a percentage of your salary — it depends on what you genuinely spend each month, how long your employer would keep paying you if you were off sick, and what safety net you already have. This calculator builds your recommended cover level from those specific numbers, then estimates what a policy providing it might cost.
Income Replacement Insurance Calculator
Calculate how much income replacement cover you need and estimate your monthly premium. Covers long-term illness, accident, and redundancy.
Why This Is Based on What You Spend, Not What You Earn
Rather than defaulting straight to a fixed percentage of income, this calculator lets you enter your actual essential monthly expenses directly, using that figure as the benchmark for recommended cover whenever it is provided. This matters because two people on identical salaries can have genuinely different real needs — someone with a paid-off mortgage and modest outgoings needs less cover than someone with a large mortgage and dependants, even at the same income level. Falling back to a standard percentage of net income only happens when a specific expenses figure is not entered, treating it as a reasonable default rather than the primary basis for the recommendation.
Working out this figure properly is worth the short amount of time it takes, since an accurate expenses number produces a genuinely more useful recommendation than a generic percentage ever could — going through recent bank statements to separate essential from discretionary spending, similar to the process worth using for an emergency fund target, gives the most reliable starting point.
The Redundancy Add-On Most Policies Don’t Include
Standard income protection covers illness and injury specifically, not redundancy — losing your job is a different risk entirely, and most policies exclude it by default. This calculator includes an optional redundancy cover toggle, reflecting that some providers do offer combined accident, sickness and unemployment cover as a genuinely different product from pure income protection. It is worth being clear about which risk you are actually trying to cover before assuming a policy protects against both, since conflating the two is a common and costly misunderstanding when comparing quotes.
Combined accident, sickness and unemployment policies also tend to have more restrictive terms around the unemployment element specifically, such as excluding voluntary resignation or requiring a minimum period of continuous employment before a redundancy claim becomes valid — reading these specific conditions carefully matters more here than for illness and injury cover alone.
Counting Backwards From Your Sick Pay End Date
Employer sick pay, where it exists, usually runs out well before a serious illness or injury genuinely resolves — this calculator uses the number of months your employer would continue paying you before dropping to Statutory Sick Pay, then calculates the real gap you would face once that runs out. A generous employer offering six months of full sick pay creates a very different, more comfortable gap than one offering nothing beyond the two-week statutory minimum, even for two people on identical salaries — which is exactly why this figure changes the recommended cover meaningfully.
Two People, Two Different Recommendations
Someone earning £40,000 net of around £2,600 a month, with essential expenses of £1,800 a month, gets a recommended cover figure based directly on that £1,800 need, capped at the 60% maximum of net income if the expenses figure happened to exceed it. Someone on an identical £40,000 net income but with essential expenses of only £1,200 a month gets a noticeably lower recommendation, reflecting their genuinely smaller real need — illustrating exactly why an expense-based approach produces a more personalised, and often more affordable, result than a flat percentage of income applied to both cases equally.
How This Differs From Standard Income Protection
This calculator and standard income protection cover overlap considerably — both replace income lost to illness or injury — but this one is built around your specific expense figure and includes an optional redundancy element, while a standard income protection policy is typically priced purely as a percentage of salary with illness and injury only. Our Income Protection Calculator is worth comparing directly if you want the more standard, salary-percentage approach instead. And if your existing savings could realistically cover a shorter gap before any policy needs to start paying, our Emergency Fund Calculator can help work out how much of a buffer you already have in place.
Frequently Asked Questions
Should I use my expenses or my income to set the cover level?
Expenses generally give a more accurate, personalised figure, since they reflect what you actually need to keep paying rather than an assumed proportion of income. Use income as a fallback only if you have not yet worked out a reliable expenses figure.
Is redundancy cover expensive to add?
It typically adds a meaningful amount to the premium compared with illness and injury cover alone, reflecting the genuinely different and often less predictable risk profile of unemployment compared with health-related absence.
What if my employer offers no sick pay at all beyond statutory minimum?
This creates the largest possible gap between what you would receive and what you likely need, which this calculator reflects directly — a shorter deferred period may be worth the higher premium in this specific situation, since there is little employer-provided buffer to rely on in the meantime.
Does self-employment change how this works?
Yes — self-employed applicants generally have no employer sick pay at all, only Statutory Sick Pay if eligible, and are typically loaded slightly higher on premium, reflecting a somewhat less predictable and verifiable income to insure against.
Is the recommended cover figure always achievable?
Not necessarily — insurers cap cover at a maximum percentage of net income regardless of what your expenses suggest you need, so a household with very high essential costs relative to income may find the maximum available cover falls short of the full calculated need.
Can I change my cover level after the policy starts?
Many insurers allow cover to be adjusted as your income or expenses change over time, though a significant increase may require some updated underwriting, similar to setting up new cover from scratch.
Important Information
This calculator provides an estimate for general information purposes only and does not constitute insurance or financial advice. Actual cover levels and premiums depend on full underwriting by the insurer. For advice specific to your circumstances, consult a qualified financial adviser. See our Disclaimer for further information.