In deciding which protection plan would best suit you we need to start from a point of working out what it is you need to protect?

The real question you need to ask would be.

Who is going to be worse off financially if I were to...? And you fill in the words die, get sick, lose my job ...etc.

This is going to give you a far clearer picture of whom and what you need to protect.

Let’s take life assurance; we can split that down into the following categories;

1. Protecting your mortgage and other debts
2. Protecting your family
3. Protecting your income

The first of these, protecting your mortgage and other debts, depends on your own personal circumstances.

Single people

Single people may have less need to cover a mortgage debt as the potential value of the property, if sold, may cover this. However if they have other debts too, then these would need protecting especially in today’s climate of falling house prices.

The question you would ask is. Will selling the property cover all debts? If not then you may need some protection.

The single person may be better off protecting in the event of not dying. For this you would use Critical Illness protection, Income Protection Insurance and redundancy protection.

Critical Illness would pay a lump sum to you once you were diagnosed and you would use this to repay your mortgage and keep your house.

Income Protection would pay a regular monthly amount to you until you returned to work or reached retirement or policy end date.

Redundancy protection would pay a regular monthly amount for a short time to cover this eventuality.

 Families

The Situation changes again with a family. In this situation there is likely to be someone who would be worse off financially if you were to...? Again fill in the blanks.

Not only do you now need to protect the mortgage debt if you have one, you are also likely to need some income protection as well.

Even if you pay off the mortgage your family would still like to have an income so that your partner would not need to go back to work.

And then there are the kids to think about.

For this you would use Mortgage protection, Income protection and Family income benefit.

This last one gives a monthly income to your family in the event of death and/or Critical Illness and pays out for a specific term, usually set up till the youngest reaches past schooling age.

As some of these plans may look like they are duplicating themselves it is best to seek financial advice to get the right plan for you. For instance - Income Protection or Family Income Benefit? They both give a monthly income, one till you return to work or retirement and the other for a fixed number of years.

In all this, remember to consider what existing protection plans you already have. Are you already paying for something through the bank? It sounds inconceivable that you could be paying for something without realising it but it is often the case that banks like to sell protection insurance for loans and credit card debt and may even bundle the payments in with your normal monthly payment.

Ask the question!

What does your employer offer? Do they have a sick pay scheme? In my experience most people say yes but have no idea what level is paid or for how long this lasts. Do they have a death in service scheme, which is often bundled with the pension scheme. If so, how much would it pay out?

Always remember, with employer schemes they are only as good as long as you stay in the job. If you lose your job you will also lose these benefits.