Protect

Life Insurance doesn’t have the power to resuscitate us if we’re dead, but it can go some way towards replacing the money needed by loved ones when we’re six feet under - such as paying off the mortgage on the family home. So, you should ideally make sure any debts can be paid off if you were to die.

Critical Illness Insurance pays out if we’re diagnosed with something nasty and life-changing - accidents and illnesses. Often these things won’t kill us, but they will likely mean an extended period off work, assuming we can ever return. Sometimes our house may need alteration, such as for wheelchair access. Critical Illness is more likely to pay out than life insurance, which makes it more expensive, but it should be considered an essential.

Income Protection Insurance is designed to replace most of your income if you can no longer earn it. So even if your illness isn’t critical, if you can’t work, an income protection policy will pay until you are able to return work or until the end of the policy, whichever comes first. Depending on your sick benefits from work, you should consider income protection as well as life cover and critical illness insurance.

Every situation is different:

• Someone with large debts and a young family needs more life insurance than a singleton with no debts or responsibility, who probably doesn’t need any.
• But, that singleton and family breadwinner should ask how he or she would cope if they were unable to work for an extended period of time and consider income protection.
• If you have a major debt, like a mortgage, you should ideally have that paid off in the event of a critical illness. At the very least, you should think about insuring yourself for three, four or five years’ worth of mortgage payments, to give yourself a breathing space if the unthinkable happens.