Last month we discussed the question of protecting your assets; this month we look at protecting your income.

The days of a job for life are long gone. These days employment is  fluid, people change jobs, undertake contracts, work self employed. This all works well so long as you have your health, but if you fall ill for a long period, your financial state is likely to be badly hit. How will you pay the mortgage let alone the utility bills, pay off the credit cards and even, perhaps, the heavy commitment of private school fees.

The answer is insurance, we insure our car against accidents, our house against fire and water damage, our kitchen equipment against breakdown. Well now is the time to consider insuring yourself against having a long term sickness and being unable to work.

Having such cover in place is appropriate whether you are employed or self employed (unless your employer offers a scheme). There are two types of policy available;  Income Protection and  Accident and Sickness insurance. Please avoid the Accident and Sickness policy. It is cheap but totally inappropriate as the benefits are only paid out for a maximum of two years and you can lose the cover if you become sick.

The Income Protection policy is a permanent policy; once the Insurance Company have taken you on, they will continue to insure you however many claims you make and if required they will continue to pay benefits right up to retirement age. The added attraction is that the income received as a result of a claim is tax free.

The cost of the cover is not cheap but the benefits of securing the long term financial security of your family far outweighs this.