There are a number of different types of insurance policy designed to protect you from the financial strain of Accidents, Unemployment and Ill Health.

A & S (Accident & Sickness Benefit)

A policy which can provide replacement of 'top-up' income for short term illness or accident. The amount you will receive is decided upon at the time you take out the policy and can either be a cash sum or a regular income. It will depend on the severity of the illness and the likelihood of you returning to work.

One of the recognised problems with this type of insurance is that the policy is "Annually renewable" which means that the insurer does not need to renew your policy if they think it may be detrimental. An example of this is when a policyholder makes a claim for a Back injury and receives a benefit for a few months. At renewal, the policy could exclude any further payments related to back injury.

This type of policy is cheaper than "Income Protection" but is not as good.

U (Unemployment)

A policy which can provide replacement income in the event of your being made redundant or unemployed. For some people this is a necessity. It will depend on your own attitude to whether you will try to get ANY job just to keep a roof over your head, or if you are prepared to "sit it out" waiting for a comparable job to come along!

The benefit is normally set at the same amount as your mortgage payments or your rent, and is paid for up to one year. There are a few policies that pay for up to two years, so you have to shop around.

Mortgage Protection

This type of policy is normally associated with life insurance, but you can have Critical Illness cover built into it. It is designed to repay your mortgage if you die or have a Critical Illness. The cover starts off at the same amount as your mortgage and reduces each year in line with the reduction in your actual loan. It works well if you have a "Repayment" mortgage which is where you are paying capital and interest, but beware if you have switched to an "interest only" mortgage where the capital is remaining level as your Endowment/PEP/ISA/Pension builds up.

If this is the only Critical Illness policy you think you need, make sure you will have sufficient funds available, in addition to repaying the mortgage, to spend on any remedial work to your home, to cope with your "after illness" requirements.

Income Protection Insurance also called Permanent Health Insurance (I.P. or P.H.I.)

A policy that is designed to pay you an income for as long as you are ill and not able to carry out an occupation. Please note that, as with anything in life, there has to be small print (ever tried to read the back of a car hire agreement, let alone understand it!).In the case of Income Protection, you should be offered the opportunity to cover your OWN occupation so that, if you are ill and can't do your job, you will be paid a percentage of your pre-disability income until you are able to return to work either full or part time.

You will be asked to select a "deferment period" which is the time you expect to be paid by your employer, or, if you are self-employed, the period you think you can financially survive on your own resources.

Deferment periods are NORMALLY 4,13 or 26 weeks, but there are policies available that will start to pay you if you are ill for three days or more and they backdate the claim to the first day of the illness.

At the other end of the scale are the policies that defer for 2 years, but they are usually combined with an employment contract where you get full salary for a period of time and then a percentage of your salary for up to 2 years.

There is an art in matching your financial requirements to your financial liabilities, and, as in most cases, you will need the help of a professional in selecting the correct policy for your personal situation.

If your employer already offers some form of Income Protection policy, ask if it has a "continuation option" if you leave the company!

Finally, how long do you want the benefit to be paid for? Most policies will pay until you go back to work or you reach a pre-selected age such as 60 or 65. Make sure the cut-off date matches your other financial arrangements!