How to protect your family if you are the breadwinner

FOR those worried about the financial implications of being struck down by a serious illness, or even dying, there are products to help households left without a breadwinner. They are all labelled protection insurance, but take many forms. All quotes are provided by London & Country.

LIFE COVER: For most families, life insurance is a must. It is often bought in tandem with a home loan and will ensure any mortgage is cleared upon death. Proceeds are tax-free.

The monthly premiums will not break the bank. For a non-smoking couple, both aged 35 and in good health, £200,000 of life cover for 25 years costs £17.49 a month from Legal & General (payable on first death) or £10.71 per partner if single policies are bought from AIG.

If the insurance is to dovetail with a capital repayment mortgage, where the debt falls over time, £200,000 of decreasing term assurance will cost just £13.17 a month, or £7.75 per partner, all from AIG.

Some versions of life cover pay a monthly income instead of a lump sum. This is often referred to as family income benefit. For our same 35-yearold couple, a joint policy paying an annual income of £30,000 for a maximum of 25 years (the clock starts ticking as soon as the policy is set up) costs £33.40 a month from Royal London. The income is tax-free. CRITICAL ILLNESS INSURANCE: This pays out a pre-determined sum if the policyholder suffers a serious illness such as cancer, a heart attack or stroke. Any payout is free from tax. One of the best ways to buy cover is in tandem with life cover, but premiums are not cheap. Taking our 35-year-old couple, a life and critical policy set up on a joint basis would cost £111.54 per month through Zurich. INCOME PROTECTION: Instead of paying a lump sum, this cover provides an agreed monthly tax-free income in the event of long-term illness. It is paid until someone is able to go back to work or retires. DEATH-IN-SERVICE: Many employers will pay this benefit if you die while on their payroll. It is tax-free and is usually between two and four times your annual income.