Income protection (pii) Basic protection

If you fall sick and you are married, perhaps with a family, or if you die, who is going to pay the bills?

The ways to cover these situations are cheap and simple.

� Term (or temporary) assurance. This is just like whole-life assurance except that it lasts for a limited time (say ten or fifteen years). It is cheaper than whole-life assurance and well worth considering having while your family is growing up. It covers you within the term specified if you die, but you get nothing at the end. Your family, hopefully, will not need the support then, because you have not died.

� Whole life assurance. This pays a guaranteed sum when you die. The premium you pay will be related to the sum guaranteed and to your age. It is worth starting young and topping up for inflation as time goes by.

� Endowment assurance. This helps you to save for the future and insures your life. You pay premiums for a fixed number of years. The policy pays out a capital sum if you die during this period, or at the end if you are still alive. Endowment policies can be without profits (you get the guaranteed capital sum) or with profits (you get the sum plus a share of the life assurance. company's profits).

� Permanent health insurance. This pays out a weekly or monthly income if you fall ill. It is particularly relevant if you are self-employed.

Don't become confused with other sorts of insurance at this stage. If you want simple protection only there is no point in paying for extra benefits you don't need. You should aim for cover of at least 75 per cent of your annual income, less any invalidity benefit that may be available. This basic protection is less important if you are single or retired.


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