Many people do not have an emergency fund to fall back on in the event of something unfortunate happening which is beyond their control. If you were unable to work, how long would you be able to continue paying your mortgage and other bills?
Protection policies are designed to ensure a personal catastrophe (death, loss of income etc) doesn’t cause a financial crisis.
The most common types of protection plans are listed below with a high level description:
Most commonly taken in connection with a mortgage to ensure in the event of death of a borrower, the mortgage can be repaid. This is especially important where the household income is reliant upon one person’s income, and the death of that person would result financial hardship and potentially the forced sale of the family home.
These policies provide an income should you be unable to work due to sickness or accident. They can be constructed to compliment your employers sick pay arrangements (if any) to ensure you are only paying for cover you need.