Income protection is designed to replace or supplement your income in the event that you are unable to work. Insurance can be taken out to cover accidents, sickness and is intended to provide short term cover ranging from 12 to 24 months or up until retirement on long term accident & sickness cover, depending on the policy. Common reasons for taking out income protection include protecting mortgage or loan payments whilst ensuring you are able to maintain your lifestyle and can continue to financially support your family and loved ones.

Policies fall into two main categories, Permanent Health Insurance (PHI) and Accident, Sickness and Unemployment Cover (ASU). Despite both providing income protection, they are very different and are often confused for one another and misunderstood. The main difference is PHI provides long term financial protection (payments continue until a specified age of retirement) and ASU provides short term financial protection (payments are made for a maximum of two years). Both policy types pay a monthly benefit which is exempt from tax.