Are you considering taking out income protection insurance but you wish to know more about the cover before going ahead and paying for it? This kind of insurance policy was established to help those who lost their salary by giving them a replacement income. This may be useful in three ways.

So, for example, if you have an income protection insurance policy to depend upon then you may qualify for your provider to pay you part of your salary as replacement income if you:

• cannot work because you have a specific illness;
• cannot work because you have had an accident;
• if you become a victim to redundancy and lose your job

Possibly these three things may happen to any of us, at any time. After all there is no job security any longer. Nobody knows what is around the corner and predict illnesses that strike out of the blue or accidents that put them out of action for significant periods.

If there is no policy to fall back onto and help towards these events then you may have to look into the following:

• company benefits (if you (can apply)
• mortgage help or state benefits if you qualify for help
• any savings you may have stored away

While you may wish to take a chance and rely on the above, they may not bring the peace of mind and security that a policy might. Not having a regular wage coming in, even for just a few months, may make it hard for you to pay your mortgage, meet any debt commitments and pay for your general living costs.

Of course you may be worried about whether you are able to afford to spend any more money. It may be that looking at this kind of protection might be useful if you want to avoid this happening.

What are the typical benefits to taking out protection?

• short term income protection (often called ASU insurance which stands for accident, sickness and unemployment insurance) may provide you a replacement salary for a short period of time if you become unemployed, get ill or have an accident. This policy type may typically last for 12 months and is designed to give financial support until you get back on your feet again. Benefits on offer may also include advisory services to help you find a new place of work;
• long term income protection may pay you a replacement salary for a longer period if you are unable to work due to illness or accident. Benefits typically offered with this protection will last for as long as the policy has been set up for or until you reach retirement age, die or find a new job (usually whichever comes first).

If you have income protection insurance in place and qualify for a claim then your provider pays you a significant percentage of your income. This may be useful to have and may make the difference between having enough money in your bank to meet your financial needs and having to worry about how make ends meet.

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