Loss Of Licence vs Income Protection Cover
An illness or injury can have a massive impact on a commercial pilot’s career. A medical issue which may have little impact in other professions could easily result in the long-term or permanent inability to work for a pilot.
Loss of Licence Cover is well-understood by most pilots as many will have it or know someone who does. However, it has its drawbacks which has resulted in many pilots taking out their own Income Protection Cover.
Income Protection is designed to pay a replacement income if anything medically prevents you from doing your occupation rather than the illness / injury needing to be something that causes you to lose your license.
What is Loss of Licence Insurance?
Loss of Licence Insurance is a policy many commercial pilots rely on due to the strict medical standards required to keep flying.
It’s designed to provide financial support if your licence is withdrawn for medical reasons, helping you stay on top of bills while you’re unable to work. Loss of Licence Insurance policies can provide either a lump sum payment if the license is lost permanently or a monthly income if the license is suspended to tide you over until you are well enough to return to work.
The Drawbacks of Pilots Loss of Licence Cover
One of the key limitations of this type of cover is that it’s usually tied to a fixed amount. That means whether you receive a lump sum or monthly payments, everything ultimately comes from the same capped “pot” of money.
Important to understand
If you’re insured for £100,000 and choose to receive a monthly income instead of a lump sum, those payments will continue only until the £100,000 has been fully paid out. Once that limit is reached, the income stops. If you’re still unable to return to work at that point, you could find yourself without ongoing financial support.
Licence must be revoked
Depending on the policy, it is the requirement that your licence must be officially revoked or suspended before a claim can be made. This can create a gap in cover. For example, you might be dealing with an illness or injury that prevents you from working (such as a back issue), but isn’t severe enough to trigger a formal suspension or loss of licence. In that situation, you may not be able to claim at all.
Limited Cover as you get older
Many policies also place limits on how long certain types of cover apply. For instance some plans may stop covering illness at age 55 and only continue to cover accidental injury after that. Considering that many commercial pilots plan to work until around 65, this can leave a significant gap - right at a stage of life when the likelihood of health-related issues tends to increase.
What is Income Protection Cover?
Income Protection Insurance is built to provide a regular replacement income if you’re unable to work due to illness or injury.
Unlike some other types of cover, there’s no requirement to lose your licence before you can claim. If a medical condition prevents you from working as a pilot, that’s usually enough to trigger the policy. It can cover a wide range of situations from issues like back problems or mental health conditions through to more serious illnesses such as cancer, heart attacks, or strokes.
Covering You Until Retirement
Depending on your medical situation, you can make both short-term and long-term claims on the same Income Protection policy. If you experience more than one period of ill health during your career, the cover is still there - you’re not limited to a single claim.
In practice, that means it doesn’t matter how many times you need support. As long as you meet the policy terms and have been off work beyond the deferred period, you can claim for each separate illness or injury.
This is very different from Loss of Licence Insurance, which is typically a one-time payout. Once a claim is made following the loss of your licence, the policy usually ends.
How Does Income Protection Cover Work?
The first step is making sure you have a comprehensive Income Protection policy, ideally one that covers you on an “own occupation” basis. A policy like this is designed to:
Cover up to around 65% of your gross (pre-tax) income, with payments typically paid tax-free
Start paying out after a chosen deferred period, which can be as short as 4 weeks
Continue cover right through to your selected retirement age (for example, 65) without limiting the types of illnesses or injuries included
Pay a regular income if a medical condition prevents you from working as a pilot, potentially continuing all the way to retirement if needed
There are lower-cost options available, but these often limit how long a claim can be paid for… commonly 1, 2, or 5 years per claim. For pilots, where an illness or injury could permanently prevent a return to flying, that kind of limit may not provide enough long-term protection.
Why “Own Occupation” Cover Matters
For pilots, choosing an “own occupation” definition of incapacity is essential.
This means the policy will pay out if you’re unable to do your specific job as a pilot due to illness or injury not just any job. Without this, you could find yourself assessed against your ability to work in a different role, which may reduce the chances of a successful claim.
Specialist Protection Advice for Pilots
Even the most comprehensive Loss of Licence Insurance won’t cover every illness or injury that could potentially bring your flying career to an end.
At Kingsbrook Finance, we understand the risks pilots face and the gaps that can exist in traditional cover. We’re well placed to help you put the right protection in place - ensuring you and your family are financially secure, whatever happens.
Speak With Us Today
When it comes to protecting yourself and your finances, you deserve a service that’s straightforward, expert-led, and focused on your needs. Here’s why it makes sense to speak to us:
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We regularly help pilots navigate their protection options, so if things feel a bit confusing you’re not alone - just get in touch and we’ll help make sense of it.
Reach out to us today on 0204 553 8828 or drop us an email: info@kingsbrookfinance.co.uk