HOW DIFFERENT FINANCIAL PROTECTION PLANS WORK

CRITICAL ILLNESS: Pays out a tax-free lump sum on diagnosis of a serious illness. Often sold with life cover when someone takes out a home loan – thereby ensuring any outstanding loan can be cleared if the household is struck with illness or death.

INCOME PROTECTION INSURANCE:

Pays a regular tax-free income if policyholders can’t work because of sickness or disability. Payments continue until they return to paid work or retire. Also known as permanent health insurance. LIFE COVER: Pays out a set sum on death. Decreasing cover is available to those with a home loan – with the cover reducing in line with the outstanding mortgage.