Protecting your family is the concern that grips most of us from one end of the year to the next, especially families with young children and dependents. How well are you really addressing this need?

Have you ever assumed that having health insurance is sufficient protection to cover life's risks for your family? Or lately you may have reviewed your health insurance and lowered the plan level, switched insurer or even cancelled due to affordability issues. Some have cancelled a life/illness policy due to affordability issues without really understanding what cancelling this policy would mean to you the family or when it might be missed (risks covered). If something happened, could the family afford to be without the cover?

These are normal dilemmas faced by people today and for most, the differences between the policy types are not well understood. Remember the principal of protection insurance policies is that the premiums of many pay for the losses of the few. All of these policies have their place to protect against normal everyday risks. Proper financial advice will position these properly for you and help overcome fear and affordability.

Under each policy type, there are quite a range of options of cover to choose from and optional benefits (not covered here). What you may realize is that each policy is important in it's own right. In addition, you will rank them in order of priority for your individual circumstances although none are real substitutes for the other. Seek proper independent financial advice to arrive at a decision that is most suitable for you. It can make a big difference.

The following table sets out the main differences between Private Health Insurance, Specified Illness and Income Protection.

Feature Health Insurance Specified Illness Income Protection 
Benefit Type Reimbursement depending on cost of treatment & level of cover  Insured Lump Sum not tied to income Insured Monthly income
Term Annual renewal Up to age 75 Retirement age 55 -65 
Max benefit Limited to proven expenses No Limit on amount insured 75% of income for self-employed/PAYE (net of state illness benefit)
Cover Day to day medical expenses Diagnosed Specified serious illnesses Inability to work due to illness/disability 
Main claim reasons Doctor visits, Hospitalization, Prescriptions, Consultants,  Operations Cancer, Stroke, Heart Attack, up to 72 listed illnesses Mental disorders, Muscular skeletal, Nervous system, Heart, stroke, Cancer
Payout Acceptable expenses incurred. 30 days survival of diagnosed specified illness. Policy expires once benefit paid. Usually deferred period of 4/8/13/26 or 52 weeks until you are well enough to return to work. Policy continues on return to work.
Continuation Yes Expires after benefit payout Continues to retirement age if premiums paid
Protect against Hospitalization, day to day medical expenses Mortgage O/S, Replace income, home modification Monthly income to keep up regular outgoings
Cost Premium/Tax relief Annual review and tax relief at source Guaranteed premium and no tax relief Guaranteed or 5 year reviewable and tax relief on premium
Underwriting/risk No Yes and must be taken out before age 60  Yes with occupational risk classification
Insurable interest (business) Individual/family(group scheme subject to BIK) Individual/joint/dual (individual business protection) Individual only (executive income protection)