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 people if they lost their salary by giving them a replacement income. The protection is typically useful in these three different 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:

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

These three things may happen to any of us, at any time. After all there is no job security any longer. 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 (can apply)
• mortgage help or state benefits if you qualify for help
• any savings you may have saved for a rainy day

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 pay check 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.

Adding money worries to the mix when you aren’t able to earn because of illness, accident or unemployment may not be a great idea. It may be that looking at this kind of cover 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 pay 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.