If you have started to think about income protection insurance and why it may be useful to you then you may still be at the stage where you aren’t quite sure why yet. This kind of insurance policy was established to help those individuals 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 cover you then you may qualify for your provider to pay you part of your salary as replacement income if you:

• are unable to work due to suffering a specific illness;
• cannot work because you have had an accident;
• lose your job for a specific reason such as redundancy.

These three things may happen to any of us, at any time. Nobody is able to predict how safe their job is any longer or how well their company may do. Nobody can 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 (are eligible)
• state benefits/mortgage help (if you qualify);
• any savings you may have you have in case of emergencies

Whilst these alternatives may help and may be useful, they may not, in many cases, be enough and they may not last for long enough. Not having a regular income 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;
• If you wish to have an income over the longer term then you need to consider long term protection. Benefits typically offered with this cover 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).

Were you to need to make a claim on your insurance the policy typically provides you with an income that is a substantial sum of your own income. This may be useful to have and may make the difference between having enough money each month to meet your financial needs and having to worry about how make ends meet.