Income protection insurance
Income protection insurance pays out a regular cash payment that replaces part of your lost income if you can’t work due to a medium to long-term illness or disability. It can also be called ‘permanent health insurance’ - but is not the same thing as private health insurance. Income protection insurance does not cover redundancy.
You only need this if you are self employed, or if you are a PAYE worker whose employer does not provide sick pay.
You can get tax relief on your premiums at your marginal (highest) rate of tax, up to a yearly limit of 10% of your total income. This can make premiums more affordable, but remember your benefit will be taxable if you have a successful claim.
If you are a member of a group scheme, your employer usually takes your premiums from your salary before tax and PRSI are taken off.

Mortgage Repayment Protection
Known as mortgage payment protection or mortgage repayment protection, this type of policy will cover your mortgage repayments if you lose your job through redundancy, an accident or sickness.
But some financial experts have questioned the wisdom of these policies claiming they are difficult to get a payout on, expensive and the policies are full of exclusions.
(Redundancy cover only available to arms-length employees, not directors or self-employed.) The claim will be paid for a maximum of 12 months.
Premiums for this insurance has shot up by 40% in the past year as unemployment has ballooned. Some providers report a 300% increase in claims.
There are also a large number of financial advisers out there who question how difficult it is to make a successful claim on these policies.
Some of the policies will not pay out for up to 120 days from the date you are no longer able to work.
But the biggest problem with these policies is that your claim will be denied if the insurer has reasonable cause to believe your job may be under threat. Most people in the private sector at the moment have reasonable cause to believe that they may lose their jobs.
Also, to get a claim paid for redundancy you have to prove that for each of 12 months you have been unable to get any form of remunerative employment at all. So if you start flipping burgers that will be a sufficient reason to throw out a redundancy claim.

Serious/Critical illness insurance
Serious illness insurance pays you a tax-free lump sum if you are diagnosed with one of the specific illnesses or disabilities that your policy covers. It is also sometimes called “critical illness cover”. It is often sold as an extra benefit on a life insurance or mortgage protection policy, but it can also be sold as an insurance policy on its own.

You can claim the benefit on your policy only if you meet the following three conditions:

• the illness you develop is one of the illnesses your policy covers at the time of your claim;
• a medical diagnosis confirms that your illness matches the definition of that illness outlined by the insurance company in your policy terms and conditions;
• you survive for a period after you are diagnosed. This period may be seven or fourteen days, depending on the policy.

Be aware that in a recession sales of these types of protection policies traditionally rocket as consumers become much more risk-adverse.
If you do agree to a request from your bank, life company or broker to sit down and discuss your finances, make sure you do not end up being sold something you do not really need.
Because those who sell protection policies are adept at playing on your fears and they sometimes use scare tactics to get you to sign up for additional and unnecessary cover.