Compare Life Insurance and other protection insurance cover

Protection insurance gives you and your loved ones a financial safety net if you die, get diagnosed with a critical illness or if you aren’t able to work because of illness or injury.

Here we help you understand the different types of protection insurance and whether it’s worth taking it out. If you decide it’s the right choice we have a free comparison tool to help find the best deal for you.

What different types of protection insurance are there?

Broadly speaking, there are three main types of protection insurance:

Life insurance

This pays out money to your loved ones when you die. This can be paid either as a lump sum or in regular instalments.

Income protection insurance

This gives you regular income if you are unable to work due to illness or injury.

Critical illness insurance

This pays out if you get diagnosed with a critical illness listed in the policy. It typically covers you for illnesses such cancer or Parkinson’s disease.

Are these policies essential? And if so, which one is the most important one?

Protection insurance is not compulsory. However, some people see this type of insurance as essential to make sure their loved ones are protected financially.

Bear in mind that if you are taking out a mortgage, some lenders will only let you borrow money on condition that you have a life insurance policy in place. But it’s not a legal requirement.

Life insurance is an important safety net for families because it means that your loved ones won’t suffer financially should you die. It’s usually recommended if you have dependents. 

But you might decide that income protection and critical illness are just as important as life insurance, particularly if your employer would only offer you statutory sick pay. 

How to get the best policy for you

There are a number of different policies to choose from and which is right for you depends on your personal circumstances and what you want it to protect most:

* Any children or dependants
* Your income
* Mortgage repayment

If you have children or another person that you are responsible for financially, then life insurance is a sensible option. It ensures that your loved ones are taken care of after your death.

If you have no dependents or you rely on your salary alone, then income protection insurance is likely to be better for you. It will pay out should you find yourself unable to work due to illness or injury.

You can choose more than one policy but protection insurance can be costly, so you need to weigh up the pros and cons of each. 

Work out exactly what cover you require for the price you will need to pay. Remember too to check what you already have in place through your employer. 

What to watch out for

As with all insurance policies, it’s vital that you read the small print really carefully before you sign up to make sure that it covers everything that you want and expect it to.

Here’s what you need to check: 

You understand the policy — Insurers have a responsibility to ensure their policy documents are written in plain easy-to-understand English. If you can’t understand it, don’t sign up.

The exclusions — Not every illness is likely to be covered by every policy. Certain pre-existing conditions may or may not be included while suicide or death due to the misuse of drugs or alcohol are likely to be excluded in a life insurance policy.

The conditions — A family history of certain illness or a pre-existing medical condition may result in conditions being attached to the policy. These need to be explained clearly before you sign up.

Assessing the risks — For illness and injury cover, find out how an insurer categorises your job, for example, and assesses your potential risks when working out how much to charge you for a policy. This varies between providers and can impact cost significantly.

Amount of cover — You need to know exactly how much you or your family will receive in order to know if it will be sufficient for your needs. Check whether your payments will be impacted if you have other sources of income, such as from state benefits. 

Increasing cover — Check whether your payments will go up in line with the cost of living each year as this will make a big difference to your income.

Length of time to pay out — There is usually a minimum period of time you have to wait before payments begin. This can range from four weeks to six months. If you think you can wait longer, perhaps because you have a pot of savings already or sick pay at work, your premiums may be cheaper.