This week our reader want to know how they can get additional financial aid if they fall ill and cannot work.

This is turning out to be a really challenging year: I’ve stayed well but am horribly aware that I might struggle to make ends meet if I do become ill with the virus – or any other illness or injury.

I am a director of my own small company with just me on the payroll and fortunately I’ve been able to keep working from home throughout lockdown.

I think I need to have some sort of protection cover that would kick in if I became ill and couldn’t work.

What do you suggest?

  • Carl Lamb of Smith & Pinching responds:

There are two types of personal protection you might consider to help you cope financially if you were to become ill and unable to work.

Income protection provides a monthly tax-free payment to replace a portion of your income if you can’t work because of illness or injury.

You will qualify for payments under the policy if you are “incapacitated”: the policy will give a detailed definition of what incapacitated means and any exclusions that might apply, so do read policies carefully.

When you set up a policy, you specify how soon after falling ill payments will begin – known as the deferred period – which can vary from four weeks up to a whole year, depending on your needs.

Once payments begin, they continue until you can return to work.

Critical illness cover is a completely different type of policy.

It provides a single tax-exempt lump sum if you are diagnosed with one of a specific list of illnesses once they reach a severity level that is specified in the policy.

It’s important to realise that only the illness listed in the policy are covered and only then when they become sufficiently serious to qualify.

Of course, both income protection and critical illness cover will depend on you continuing to pay premiums up to the point of making a claim.

As you run your own business, you might also want to consider business protection cover so that your business doesn’t fail financially while you are ill.

Key Person cover will provide a lump sum if the person(s) named in the policy dies or is diagnosed with a critical illness that has been specified in the policy.

The policy is taken out by the business and the benefits are paid to the business.

It can be used to cover the business owners or any critical member of the team whose absence would have a significant impact on the profits of the business.

In addition, the insurance can be set up to include protection for the repayment of business loans or to protect profits.

Do get independent advice about the different types of cover that would be the most suitable for you.

This is a marketing communication: any opinions expressed in this article do not constitute advice