One of the biggest fears for many people is not being able to pay the mortgage - or meet other financial commitments - if they are made redundant or unable to work due to illness or accident. This is particularly worrying in the current uncertain climate, but one of the simplest ways to cover loss of earnings is by taking out income protection.

Income protection pays out a regular tax-free replacement income if you are unable to work because of ill health or an accident; it enables you to pay the mortgage, as well as the daily costs of living.

How does income protection work?
Income protection policies pay out a set amount of income after a specified period of time, and you can elect a waiting period of between one and 12 months; the longer you defer, the cheaper the policy. It usually then pays out until you either return to work, retire, the policy expires  - or death.