Protection Planning Facts & Questions

They cover different things, and many people benefit from holding both. Income protection pays you a regular monthly income if you're unable to work due to illness or injury, for as long as you're off work, up to a set age. Critical illness cover pays a one off lump sum if you're diagnosed with a specified serious condition, which can go towards medical costs, paying off debt, or adapting your home. One replaces ongoing income, the other gives you a cash buffer at a single point in time.

Level term insurance provides a fixed amount of cover for a fixed period, for example £200,000 over 20 years. Unlike decreasing term cover, the payout amount doesn't reduce over time, which makes it a better fit for interest-only mortgages, or for simply providing your family with a set lump sum regardless of when within the term you die.

Often, yes. Workplace life cover, sometimes called death in service, typically pays out a multiple of your salary, commonly two to four times, which may not be enough to clear your mortgage and support your family long term. It also usually ends the day you leave that employer, so if you changed jobs tomorrow, that cover would disappear with it.

Decreasing term insurance is built around a repayment mortgage. The amount of cover reduces each year in line with your outstanding loan balance, so it's usually the cheapest way to make sure the mortgage gets paid off if you die before it's cleared. If you have an interest-only mortgage, this isn't the right type of cover, because your loan balance doesn't reduce in the same way.

The best time is whenever someone depends on your income, a partner, children, a business partner, or anyone with a joint mortgage. Cover gets more expensive the older you get and the less healthy you become, so taking it out when you're young and well usually locks in a lower premium for the life of the policy.