Income protection insurance pays you a regular income if you can't work because of sickness or disability and continues until you return to paid work or you retire. Income protection insurance is also known as permanent health insurance.

The amount of income you are allowed to claim will not replace the exact amount of money you were earning before you had to stop work. You can expect to receive about a half to two-thirds of your earnings before tax from your normal job. This is because some money will be taken off for the state benefits you can claim, and also the income you get from the policy is tax free.

You can’t claim income protection payments straightaway if you fall ill or become disabled. You usually have to wait a minimum of four weeks but payments can start up to two years after you stop work. This is because you may not need the money straightaway as you may get sick pay from your employer or you may be able to claim statutory sick pay for up to 28 weeks after you stop work.

There are other types of illness insurance you can take out such as critical illness insurance. You should compare income protection insurance with other types of illness insurance before you decide whether to buy it. For more information about these,