TL;DR
The Exeter, a UK mutual insurer specialising in health and life products, has reported a rise in income protection and life insurance premiums for 2026. The increase reflects higher claims frequency across mental health and musculoskeletal conditions, combined with the impact of NHS waiting list backlogs on return-to-work timelines. Income protection is regulated by the FCA and premiums vary significantly by occupation, age, deferred period and insured income level.
Last reviewed: 26 June 2026 | Sources: FCA, GOV.UK, HMRC
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Key Facts Claims: top cause: Mental health conditionsNHS waiting list: 7.4m (June 2026)Typical IP deferred period: 4 or 13 weeksFCA regulation: Yes -- ICOBS applies |
Why income protection premiums are rising
The Exeter's data for 2026 shows higher claims frequency across two main categories: mental health conditions including anxiety, depression and stress-related illness, and musculoskeletal conditions including back pain, joint problems and repetitive strain injuries. Both categories have seen increased claims duration as NHS waiting lists for diagnostic and therapeutic services remain extended, delaying return-to-work timelines and extending the period over which insurers pay benefit.
NHS England data shows the elective waiting list at 7.4 million patients as of June 2026. For income protection policyholders awaiting physiotherapy, orthopaedic assessment, or mental health treatment, longer NHS waits directly translate into longer periods of incapacity recognised by insurers.
What income protection covers
Income protection insurance pays a regular monthly income, typically up to 60 to 65 percent of pre-disability gross income, if the policyholder is unable to work due to illness or injury. Policies pay from the end of a deferred period -- typically four, eight or thirteen weeks -- for as long as the policyholder remains unable to work, up to a maximum benefit period (often to age 65 or state pension age). Some policies use an own occupation definition of disability; others use a suited occupation or activities of daily working definition. The own occupation definition is the most comprehensive and is generally recommended for professionals and skilled workers.
How rising premiums affect existing policyholders
For reviewable premium policies -- where the insurer can adjust premiums at set intervals -- existing policyholders may see their premiums increase at the next review date. For guaranteed premium policies, the premium is fixed at outset and cannot be increased regardless of claims experience. The Exeter, Royal London, LV= and Vitality are among the main providers of income protection in the UK. Policyholders on reviewable terms should check when their next review falls and what the policy terms say about the maximum adjustment permitted.
Is income protection worth buying in 2026?
The FCA's Financial Lives survey data shows that only around 8 percent of working adults in the UK have income protection insurance, despite the average time off work due to long-term illness exceeding six months. Statutory Sick Pay (SSP) in 2026/27 is £116.75 per week, paid for up to 28 weeks -- significantly below average UK earnings. For employees without enhanced employer sick pay arrangements, income protection fills a substantial gap. For self-employed workers, SSP is not available at all, making income protection particularly important.
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Disclaimer This article is for information only and does not constitute financial or legal advice. Kael Tripton Ltd is an independent editorial publisher and is not regulated by the FCA. |
Frequently asked questions
Why are income protection premiums increasing in 2026?
The Exeter reports higher claims frequency in mental health and musculoskeletal conditions, combined with extended claim durations caused by NHS waiting list backlogs. Longer waits for treatment mean policyholders remain off work for longer, increasing insurer costs which are reflected in premium reviews.
Will my existing income protection premium go up?
If your policy is on guaranteed premiums, your premium is fixed and cannot be increased. If your policy is on reviewable premiums, the insurer can adjust at the next review date. Check your policy schedule to confirm which type you have and when the next review falls.
What is the difference between own occupation and suited occupation income protection?
Own occupation policies pay benefit if you cannot perform your specific job. Suited occupation policies pay only if you cannot perform any job for which you are reasonably suited by training or experience. Own occupation policies are more comprehensive and generally recommended for professionals, though they cost more.
What does income protection pay?
Most policies pay up to 60 to 65 percent of your pre-disability gross income, less any state benefits you receive. The benefit is paid monthly from the end of the deferred period (typically 4, 8 or 13 weeks) for as long as you remain unable to work, up to the maximum benefit period in your policy.
Is income protection tax deductible for the self-employed?
Income protection premiums paid personally are not tax deductible. However, the benefit paid out is also tax-free. Business-relevant income protection paid by a business for an employee or director may have different tax treatment -- consult a tax adviser for your specific circumstances.
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Sources The Exeter: Income Protection |
