10 ways to protect your income if you become ill 

IF YOU became seriously ill, would you get financial help from your employer? And what about state benefits? Even if you qualify, they may be inadequate - which is where income protection comes in. 

1 What exactly is income protection insurance? 

It is designed to replace your earnings while you are off work through sickness or injury. You choose the amount of cover but cannot set the level higher than your salary. According to the government, 25% of men and 20% of women suffer a serious illness before age 65. And 20% of all people will be off work for three months through disability at some point in their career. 

2 Surely my employer will take care of me? 

Employers are obliged to pay Statutory Sick Pay (SSP) for the first 28 weeks of incapacity, at £59.55 a week. Those not eligible (because they have not paid National Insurance contributions) can claim the short-term, lower rate of incapacity benefit. Once SSP comes to an end, full incapacity benefit can be claimed. Some employers pay more than their statutory obligations. If you are self-employed, you should make provision for yourself. 

3 What about the state benefits on offer? 

There are three types of incapacity benefit: short-term benefit at about £50 a week - paid if you cannot get sick pay. You can claim short-term benefit at about £59 a week after more than 28 weeks' sickness and fewer than 52. Long-term benefit of £66 is paid after 52 weeks. Extra help may be available for people with children and dependent adults. Leaflet SD1 from post offices has details of these and other benefits. 

4 How much would I have to pay for insurance cover? 

Premiums vary but a non-smoking male accountant, 35, insured until age 60 for £15,000 a year could pay £25-£30 a month. A woman could pay £37 to £45. Among the top insurers are Canada Life (01707 651122) and Zurich Life (0345 445505). 

5 What determines the cost of cover? 

Cost depends on age, sex, health, whether you smoke and your occupation. Older people pay more because of the greater risk of falling ill. People with a medical condition might be refused cover. Women pay more because statistics show they are more likely to be ill. Premiums are higher for people in hazardous jobs. 

6 How can I control the cost? 

Premiums are also determined by the "deferred" or waiting period: the time you are off sick - usually 13, 26 or 52 weeks - before the policy pays out. You choose the period you want and pay lower premiums the longer you are prepared to wait, depending on your other sources of income and savings you are prepared to spend. 

7 How much insurance should I buy? 

Most insurers recommend a figure of 50% of net income. With state benefits, this should take care of regular bills. 

8 Are all the policies much the same? 

Some provide a no-claims discount; others have an investment element. The cheaper "any job" cover means the benefit is paid when you are unable to do any sort of work. "Own job" cover pays out when you are unable to do your own job. This distinction also applies to state benefits. After 28 weeks, incapacity benefit is paid only to those judged unfit to do any job, not just their own. 

9 What else should I look out for? 

Benefits can track inflation, but this costs more. Some insurers offer guaranteed premiums - they will not rise by more than the inflation rate. Normal premiums rise to take account of higher costs. Premiums must be paid while you are claiming. 

10 How do I make a claim on my policy? 

You have to be signed off work by your doctor for the length of the deferred period. Then you receive benefits until you return to work or reach retirement age. If you are able to return to a lower-paid job, the policy should make up the shortfall. 

Sunday Times 25 July 1999