Should you become too ill to work, having the right protection insurance in place can prove a lifeline. Research by the Chartered Insurance Institute (CII) shows that one million of us need to take a prolonged period off work each year due to sickness or following an accident - yet many of us would struggle to pay the bills if this happened to us.

According to the CII, just one in 10 workers has income protection, yet nearly half - 46% - have savings of less than £1,500 to fall back on. A quarter of us would be able to pay the bills for only three months, while nearly the same figure - 26% - would be able to meet mortgage repayments for a maximum of three months. And, given the potentially serious nature of the illness or injuries causing you to be off work, the very last thing you need is your home being at risk.

Critical illness cover and income protection are both valuable in providing that rainy day cushion should you need to take some time off due to poor health. But they are very different types of insurance with different advantages - let us explain!

What is critical illness cover?

Critical illness insurance is to protect your lifestyle should you be diagnosed with a serious or terminal condition. The conditions it covers include things like cancer, multiple sclerosis and heart attack. In the event of having any of these illnesses, you would need a long spell off work to recover or adjust to a new way of life.

Critical illness cover is not linked to your earnings; you decide the sum you would like to insure and, should you make a successful claim, you will receive this sum in one, tax-free payment. There are no conditions as to how you spend the money, so you could pay off your mortgage, pay for private medical treatment or manage the household bills until you can return to work.

Critical illness insurance is often bought as a package with life insurance. Here, you can choose from a term life policy, which provides cover for a set number of years, or whole of life cover, which runs until you pass away and is therefore guaranteed, or assured.

What is income protection insurance?

Income protection insurance (IP) is designed to provide you with an income should you be unable to work due to an accident, illness or involuntary redundancy. It is linked to your earnings and is made in monthly payments. You can have short term income protection, which typically pays out for between six and 12 months, or long term income cover, which protects against you potentially being unable to work again.

With a general IP plan, you would be able to use the monthly payment to meet any bills or living expenses. You can also take out specialist plans such as mortgage protection insurance and loan protection insurance, designed to cover those specific repayments.

Do I need income protection or critical illness cover?

Whether you need either or both types of insurance depends on your circumstances and your lifestyle. The main consideration is how you would pay the bills should you need to take time off work. If you have a partner or live with a relative who would be able to meet all payments, you might decide you don’t need insurance protection.

Many people, however, have both types in place, to cover the possibilities of short-term illness and longer-term conditions. If you’d like to find out more, compare quotes online or speak to one of our experienced advisors on 0800 862 0373.