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What is life and illness protection?

What is life and illness protection?

Life and illness protection typically refers to insurance products that provide financial coverage in the event of specific life events such as death or illness. They are designed to offer financial security and support to individuals and their families should the worst happen.

There are various different types of insurance policy available on the market to meet each individuals circumstances. Some will meet an individuals need where they have a debt such as a mortgage, where others are designed to work as a stand alone policy for example to protect income or provide a lump sum to support a family in the event of a parents early demise.

The price you pay will depend on the type of cover selected, the amount and term you are insured for, as well as your personal circumstances.

There are five main types of plan:

Life Insurance

This type of insurance provides a lump sum or a regular income to the beneficiaries (their loved ones) of the insured individual upon their death. This payment is known as a death benefit and can be used to replace lost income, cover funeral costs, pay off debts or provide financial support to dependents. Typically these can cover one person (single life) or two people (a joint policy).

Critical Illness Insurance

Critical Illness Cover is a type of insurance that provides a lump sum payment if the policyholder is diagnosed with a specified critical illness or medical condition. The plan is designed to help alleviate the financial burden associated with the treatment and recovery from serious illnesses. The lump sum can be used to cover medical expenses, replace lost income, repay debts, or make necessary lifestyle adjustments including home adaptations. Critical illness cover can be taken on its own or can be included within a life insurance policy so the plan would pay out in the event of death or diagnosis of a critical illness.

Terminal Illness Insurance

Terminal Illness cover is often confused with the above critical illness cover. Whilst they are similar in that they would provide a lump sum in the event of illness, a terminal illness plan will only pay out if the policyholder is diagnosed with a terminal illness and has a life expectancy of a short period, typically 12 to 24 months. It's important to note that this is different from critical illness cover, which typically pays out upon the diagnosis of specified severe illnesses, whether or not the prognosis is terminal.

Income Protection

Income protection is a type of insurance that provides a source of income if the policyholder is unable to work due to illness or injury. The purpose of income protection is to replace a portion of the individual's lost income during a period of disability, helping them maintain their financial stability and cover living expenses.

Typically this type of plan will cover one person (single life)and are usually set up to provide long term cover, so the plan would continue to provide you with income until the expiry date chosen or death if earlier. If you are fortunate enough to receive sickness benefits from your employer, the plan can usually be tailored to best meet your needs.

Mortgage Payment Protection Insurance

This type of insurance is typically designed to ensure the cost of your mortgage is covered if you are unable to work due to illness or if you lose your job. You can usually choose how long you would want the plan to pay out for with both 12 and 24 months being popular options. Some people choose to just be covered for just illness, whilst others want unemployment cover also included.

This is generally viewed as short term type of cover, whereas in contrast Income Protection is usually for a longer period of time. Income Protection is also unlikely to cover you for unemployment.


The goal of a life or illness protection is to offer a safety net for individuals and their families, ensuring that they have the financial resources when faced with unexpected and challenging circumstances. Everyone always hopes that this will not happen to them and none more so than the financial adviser setting up the plan for their clients but unfortunately this is not always the case and sadly we have helped many clients over the years to claim on their plans. Whilst this is always a sad time and we would rather they not need to do so, the feeling of relief that the client has a plan to support them in their time of need is immeasurable.

From a clients perspective, an insurance policy provides peace of mind by mitigating the financial impact of life-altering events, allowing individuals to focus on recovery or supporting their loved ones without the added burden of financial strain.

To find out more about the types of plans available and which would suit your individual circumstances contact Yorkshire Financial Planning on 01482 275540 or complete our contact form here.

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