Income Protection for Software Developers
This is the safest job on the site in terms of acute risk and one of the least protected in terms of contract.
Nothing is going to fall on a developer. What happens instead is cumulative: wrists, neck, shoulders and eyes, from the same position and the same movements for decades. And when something does stop you working, a contractor discovers that a good day rate came with nothing at all behind it.
Income protection pays a monthly amount while you cannot work. For a developer the first thing to establish is whether you are employed or contracting, because that decides nearly everything else.
The short answer
Software development has one physical exposure, which is sitting at a keyboard for most of a working life, producing repetitive strain, neck and back problems and eye strain. The bigger issue for many developers is contractual: a large part of this workforce contracts on day rates through their own company, with no sick pay, no death in service and no notice.
What actually stops you working
- Repetitive strain injuries in wrists, hands and forearms, including carpal tunnel syndrome and tendonitis
- Neck and upper back problems from sustained seated posture and screen position
- Lower back problems from long periods seated, which accumulate over a career
- Eye strain and deteriorating vision from prolonged close screen work
- Mental health conditions, where sustained cognitive load, on-call rotas and deadline pressure contribute
- Cardiovascular and metabolic conditions associated with long-term sedentary work
Sick pay, if you get any
Splits the profession sharply. Employed developers generally have occupational sick pay and larger employers often have a group income protection scheme, which is a good position. Developers contracting on day rates through their own company have none: no occupational sick pay, no statutory sick pay from a client, and a contract that typically allows termination at short notice if you cannot deliver. That is the exposed half of this profession and usually the better paid one.
Why the definition of incapacity decides it
The clause matters in a particular way here. Severe repetitive strain can stop somebody typing, which is how this job is done, while leaving them able to do a great deal of other work. An any occupation definition will treat that as fitness for employment. An own occupation definition asks whether you can work as a developer, and a wrist that cannot sustain a keyboard means you cannot.
Contracting Is The Real Exposure, Not The Keyboard
The repetitive strain risk is genuine and slow. The contractual risk is immediate and far larger, and it is the reason this page exists.
A developer contracting on a day rate through their own company has an income that looks excellent and stops entirely the day they cannot work. There is no sick pay, no statutory sick pay from the client, no death in service, no holiday pay and usually a notice period measured in weeks. The household's commitments, meanwhile, have generally been set against the contract rate.
If you pay yourself a small salary and take the rest as dividends, which is common, there is a further point worth settling early: how dividend income is treated for income protection varies between insurers and affects the benefit available. That is a question with a findable answer and it should be answered before an application, not after.
Repetitive Strain Is The One Thing That Actually Ends This Career
Developers tend to dismiss this because it sounds minor, and severe cases are not minor at all.
Sustained keyboard and mouse use over years causes tendon and nerve problems in the wrists, hands and forearms, and at the severe end people genuinely cannot type for more than short periods. For somebody whose entire output is typed, that is career-threatening rather than inconvenient. Neck and upper back problems from screen position follow the same pattern.
Workstation setup, breaks and input device choice genuinely reduce the risk, and no policy substitutes for them. What cover does is handle the case where it develops anyway. The timing rule applies as always: anything already in your records when you apply will be asked about, so arranging cover before the first flare is a materially better position.
If you stop
For an employed developer the work is reassigned and the job is held, which makes this financial rather than an employment risk. For a contractor the engagement usually ends, because the client is buying delivery rather than employing a person, and finding the next contract after a long absence depends on the market at the time.
Strong If Employed, Absent If Contracting
Employed developers often have death in service at a reasonable multiple, which is worth confirming from your benefit statement rather than assuming.
Contractors operating through their own company have nothing unless they have arranged it. Where cover is arranged through the company rather than personally, relevant life cover is the usual route and the tax treatment depends on your circumstances, which is a question for your accountant.
The sizing exercise should use what the household actually lives on, which for a contractor is the contract income rather than the small salary drawn for tax purposes.
A Lump Sum For Work That Does Not Need Hands
The characteristic career problem here is hands that cannot sustain a keyboard, in somebody with highly valuable and transferable knowledge.
That is a good position relative to most trades, because there are destinations that involve less typing: architecture and design, technical leadership, product and delivery management, consultancy. Some pay as well or better, and getting there may take time.
A lump sum on diagnosis funds the transition, and it pays regardless of whether you are judged capable of other work, which somebody with severe RSI generally is. That is precisely the gap income protection leaves.
If You Contract Through Your Own Company
Operating through a limited company changes what is possible and is worth looking at deliberately rather than by default.
Because you are an employee of your own company, arrangements that depend on an employer and employee relationship become available: relevant life cover for life protection, and executive income protection arranged and paid for by the company rather than out of taxed personal income. Those are genuinely different routes from a personal policy and worth comparing.
How any of it is treated for tax depends on your own circumstances and on how it is set up, so that part belongs with your accountant. What we can do is arrange the cover and tell you what each route costs.
Common questions
I contract on a day rate. What do I get if I cannot work?+
Generally nothing: no occupational sick pay, no statutory sick pay from the client, and a contract that can usually be terminated at short notice if you cannot deliver. The income looks good and there is nothing behind it, which usually means a shorter deferred period makes sense.
Would severe RSI be covered?+
Being unable to work through illness or injury is the test. The definition is decisive here: a wrist that cannot sustain a keyboard stops you working as a developer while leaving you employable elsewhere, so an any occupation policy would likely find you fit. Own occupation asks whether you can do your job.
I take a small salary and dividends. How much cover can I get?+
That depends on the insurer and on your circumstances, and it is worth settling before applying rather than after. Insurers take different approaches to dividends from a company you own, so rather than give you a rule we would find out what benefit is actually available to you.
Should I arrange cover personally or through my company?+
Both are possible if you contract through a limited company, and they are different routes rather than one being automatically better. Executive income protection is arranged and paid by the company; a personal policy is not. The tax side depends on your circumstances and belongs with your accountant.
My employer has a group income protection scheme. Do I need my own?+
Possibly, and the way to know is to check what it pays, on what basis and for how long. It also ends when you leave, which matters in a profession where people move frequently and often into contracting, where there is nothing at all.
Cover that often goes with this
The gaps we most often find sitting next to this one.