If you fall ill or are seriously injured you may find that you are unable to work for a long period. If you are employed, your employer may give you your full pay for a few weeks, and as a minimum should pay you statutory sick pay for a few months. However, this will probably be less than your full earnings, and once the statutory sick pay period is over you may find yourself reliant on just state benefits.

So what do you do if you are self employed, or if you sick pay is not enough for you to live on or when the statutory sick pay runs out?

Income protection insurance (also called permanent health insurance) is designed to pay you a regular, tax-free amount to reduce the impact on you and your family of the loss of your normal income if you are unable to work because of a serious illness or accident. It will normally continue to pay out until you can return to some kind of paid work or reach retirement, whichever is sooner.

There is usually a period that you have to wait between when you become unable to work and when your income protection policy will start to pay out (e.g. 3 months). The longer the period you choose, the lower your premiums will be, so it is important you find out what income you will get from your employer in the interim, or from any other insurance you have in the event of illness or disability.

The cost of income protection depends upon a number of factors such as your age, sex,  state of health, how long you will wait before you need payments to start, how safe or dangerous your employment is and what level of benefit you wish to receive.

Talk to your Independent Financial Advisor. They will be able to help you work out what level of cover you may have under you current employment terms or other policies, how much cover you need to arrange and which companies offer the products which are most appropriate to your needs.