This type of policy pays a monthly income tax-free if you are unable to work due to an illness or injury. The monthly income under the policy will be between 50 and 70 per cent of your salary and will be paid until you are fit enough to return to work or reach retirement age.

Critical illness cover pays out a tax-free lump sum if you are diagnosed with a major illness, including cancer and heart disease. Actual illnesses covered in a policy may vary between providers. Many insurers will make a part payment on an early-stage diagnosis of a condition specified in the policy, the percentage will vary from company to company

Family income benefit policies work in a similar way to ordinary life cover, but instead of a lump sum, the policy pays out a regular income if you die. A typical policy might be taken out by the parents of young children, so that if one parent were to die during the term of the policy, then an income would be paid out for a predetermined period of time. So, if you had a 20-year policy and were to die five years into it, then the policy would payout a regular income for the remaining 15 years.

This policy provides cover so that if you are unable to work because you’re injured or sick, or  through no fault of your own, you have lost your job. In the event of a claim, you will receive a predetermined percentage of your monthly income, usually for a period of up to 12 months. Payments are made after a  waiting period of at least a month. If you choose a longer waiting period, your premiums are likely to be lower.

Private medical insurance means that you can get access to diagnosis and treatment faster and therefore are more likely to recover quicker. Policies cover the costs of private medical care including seeing consultants and specialists, treatment, surgery, private hospital accommodation and nursing costs. You will need to decide what level of cover you want for yourself and your family, as this will determine what your premiums will cost. You can choose the level of excess, that’s the amount of any claim you are happy to pay yourself. Paying a higher excess will generally bring the cost of premiums down.