Research from the Co-op found that 54% of UK adults have no life insurance at all, and the figure for income protection is starker still – various recent surveys put it somewhere between 9% and 14%, meaning the large majority of working adults have no cover if illness or injury stopped them earning. A lot of this comes down to a simple misconception about cost. Legal & General’s research found people estimate life insurance at an average of £79.50 a month, when the actual average policy costs £27.95 – an overestimate of nearly 200%. Income protection gets guessed even further wrong: Drewberry’s 2025 survey found people expect to pay around £53 a month for meaningful cover, when it can start from as little as £10.59.
Two different ways to protect a family’s income
Life insurance pays out a lump sum if you die during the policy term – straightforward, and useful for clearing a mortgage or leaving a single sum behind. Family income benefit does a different job: instead of a lump sum, it pays a regular, tax-free income for the rest of the policy term, which can suit a family’s actual monthly outgoings more naturally than trying to manage a large sum all at once. Plenty of families use both together – a lump sum to clear debt, and an income to replace what a salary would otherwise have covered.
Income protection covers a different risk entirely
Both of the above only pay out on death. Income protection insurance is built for the far more statistically likely scenario – being unable to work due to illness or injury – paying a proportion of income, usually up to around 60-70%, from an agreed point after you stop being able to work. Given how few people hold it, and how commonly its cost gets overestimated, it’s often the more valuable conversation to have first.
Worth knowing: claims do get paid
A common hesitation is a suspicion that protection insurance is hard to claim on. Industry-wide data from the Association of British Insurers and GRiD tells a different story: 95.9% of all protection claims were paid in 2025, with individual life insurance claims paid at 96.7% and income protection at 79% – between them totalling £7.84 billion paid out to families and individuals over the year.
For Armed Forces families: real cover exists, but there are gaps worth knowing about
Serving personnel already have some protection built in, and it’s worth understanding what it actually covers rather than assuming it’s comprehensive. AFPS death-in-service benefits are paid on any death in service, whatever the cause – typically a pension for the surviving spouse or partner (62.5% of the member’s pension entitlement under AFPS 05/15) plus a lump sum. The gap is that this is based on accrued pension, not salary, so for younger personnel or those who haven’t served long, the pension itself is small, and a percentage of a small pension can fall well short of replacing what a young family actually needs to live on.
The Armed Forces Compensation Scheme sits alongside this, but only for illness, injury or death that’s service-attributable – it doesn’t extend to non-service-related causes. That doesn’t mean a family gets nothing if a death isn’t service-related, since the AFPS death-in-service pension still applies regardless of cause – but it does mean the additional AFCS support specifically depends on attribution, which is worth understanding rather than assuming.
The clearest gap of all comes at resettlement. Both AFCS protection and the enhanced in-service AFPS death-in-service terms stop the moment you leave – a preserved pension carries materially different, generally lower, death benefits than in-service terms do. Anyone moving into civilian life is moving from embedded cover to no cover at all, and needs to arrange their own life insurance or income protection as part of that transition, ideally before it happens rather than after.
Let’s look at where your own gaps might be
We work with clients across Poole, Bournemouth and the wider Dorset area, including a great many Armed Forces families, to work out what protection actually makes sense for their circumstances rather than assuming either too much or too little cover is already in place. If you’d like to talk through your own situation, get in touch and we’re happy to have a no-obligation conversation.
This article is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only. All information is correct at the time of writing (September 2026) and is subject to change in the future.
Life insurance and family income benefit policies typically have no cash-in value at any time and cover will cease at the end of the term. If premiums stop, cover will lapse. Income protection insurance is subject to insurer terms, exclusions and underwriting.
Armed Forces Pension Scheme and Armed Forces Compensation Scheme benefits are set by the Ministry of Defence and are subject to change. Current entitlements should be confirmed directly with Veterans UK.