Life, critical illness insurance and income protection policies are out there in abundance but hardly anyone is buying them according to Swiss Re – their estimated funding shortfall is an astounding 2.3 trillion. Although everyone wants only the best for their families thousands of them risk financial ruin because they have not taken steps to protect them if anything happens to the main breadwinner.

Before you set out to find the best offers you need to know what you are talking about and exactly what it is you need for your own personal requirements. Once you have found the cover that is right for you, you must then keep it in line with your life and the changes that may happen that will alter your requirements.

Life Assurance

As the name suggests this policy provides protection in the event of loss of life in the way of financial security for your dependants. If however, you don't have a spouse or children then it is not really worth considering this cover.

Life cover offers two options – these are whole of life and term. Term policies tend to work on a set time basis, for example, over a 25 year mortgage and will only pay out if you die during that time. Whole of life pays out simply when you die.

Critical Illness Insurance

Critical Illness cover pays out a lump sum once a specific critical illness is confirmed, such as a stroke or cancer. This pay-out can be used however the policy holder chooses either for private health care or to pay the mortgage off. But be warned, always read the small print as certain conditions (some cancers for example), might not be covered. Also, some insurers might not insure any pre-existing illnesses or conditions; yet, others will quote purely on their assessment of the applicant's health at the time of applying.

Income Protection Insurance

Income Protection Insurance pays out if a person will be unable to work for a length of time due to illness or accident. Generally, the longer you agree to wait for the payments to start the cheaper your policy will be so payments may be delayed initially but once they start they will continue until either the policy holder goes back to work or dies or the policy expires, usually on retirement. Extra benefits can include retraining to assist people going back to work. Income Protection will also pay out for illness not classed as critical like stress.

Accident, Sickness and Unemployment insurance

This cover can also be called Payment Protection and Mortgage Payment Protection insurance. They will pay any loans or mortgage payments in the event of job loss, illness or an accident. They tend to start one month after the income stops and usually last for 1 – 2 years but again check the small print for any exclusions or restrictions. Most insurers insist that you have had a permanent work contract by the same company for at least one year to qualify.