The loss of a spouse or parent can leave dependants with additional issues to cope with other than the emotional. If you are inadequately insured, your dependants may be left with a dramatically reduced household income, which could affect their quality of life. Potentially there may be reduced opportunities for children such as the ability to pay for a university education or difficulties in maintaining mortgage payments on a reduced income.

In the event of your death, a lending institution will not write off your debt. Rather, they will continue to pursue the debt through your dependants and could, ultimately, foreclose on the loan meaning the loss of the family home.

The main benefits the State may provide are the Widowed Parent's Allowance and Child Benefit. Depending on whether the widow(er) qualifies for Income Support, the State may or may not help with paying the mortgage interest.

The method for calculating which benefits an individual may qualify for is extremely complicated. More information is available at the Department of Work and Pensions website www.dss.gov.uk.

Advances in medical science mean that more people are now surviving serious illness than in previous years. While this is good news, many people are faced with the realisation that they may not be able to return to work, or indeed, wish to.

Critical Illness is, in many ways, similar to Life Insurance with the difference being the insured is still alive.

Many people make the mistake of thinking that should they fall ill, have an accident or lose the ability to work, the State will step in. Wrong - the rules governing sickness benefit claims have changed dramatically.

Income Protection should be considered if you would not be able to maintain your standard of living on State Benefits alone.

If your regular outgoings are normally met from income, then taking away that income can have drastic and wide ranging implications including inability to meet mortgage and loan payments, as well as basic household bills and living costs.

Plans are available for employees, self-employed people and even those who do not work but are responsible for managing a home.

Payment Protection Insurance is optional. There are other providers of Payment Protection Insurance and other products designed to protect you against loss of income. 

When taking a policy out you can normally set it up in a variety of ways - each will pay out in a different way and therefore has an effect on the monthly premium. The different criteria include:

• Occupation definition
• Deferred period
• Guaranteed or Reviewable premiums
• Increasing or level benefits

It is important to ensure you take out the policy that best suits your circumstances, not necessarily the one that provides the cheapest premium.

A policy that provides a tax-free monthly income if you are unable to work as a result of medium term sickness, incapacity or unemployment (normally 30 days or more).