‘What if I can’t work again?’

No-one likes to think about it – so most of us don’t. But if illness or injury means you can no longer earn, there is very little provision from the state. Although income protection can look pricey, if you end up needing it then the value can be priceless.

Sally is in agony today. She’s lying on the futon with only the cat for company, trying not to move. The doctor says it’s just a slipped disc and she should be back at work in a week, though it might take six. But all she can do is worry that it won’t get better and she’ll have back pain for the rest of her days. What if she can’t return to work? She has a mortgage to pay, children to feed and educate. Shoes to buy.

Some time ago she took out private medical insurance, which she would laugh about now if it didn’t hurt so much. At the moment there’s nothing a private practice can do for her that the NHS can’t. She might get seen a bit quicker, but if her bad back doesn’t improve, that insurance won’t pay her housekeeping. Her employer isn’t one of the tiny minority (12 per cent) who support staff who are off sick for more than a year.

Now Sally realises what she should have done. Instead of spending about £800 a year on medical insurance she doesn’t really need, she should have put that money towards income protection insurance. A quick calculation (luckily her iPad is within reach) tells her that for around three per cent of her salary (about £1,700 a year) she could have taken out income protection worth around £28,000 a year for the next twenty years – more than half her current annual income.

Still it does seem quite expensive, but she taps out a few more calculations. If she were to pay that £1,700 a year into the bank as an emergency fund, then in 20 years (with interest) she’d have about £45,000. She realises that, if she had income protection instead, she’d pass that figure after less than two years out of work – and over twenty years it would pay her more than half a million pounds in total.

Lying on the futon, Sally feels like a fool – the only consolation is that she’s not alone. According to a Which survey, just 9 per cent of people in the UK have income protection, compared to 16 per cent who have private medical insurance. Sally wonders how she could have ignored the NHS and yet put her faith in the welfare state.

As it turns out, there was no need to panic. The doctor was right all along, and Sally is back at work in a fortnight. She even goes out to buy those shoes – sensible ones this time. But on the way she pops in to see her financial adviser, to ask whether she should cancel her private medical insurance and take out income protection instead. It feels like she’s had a very narrow escape.

To find out more about the different types of protection available, go here.

Speak to a financial adviser today to find the most cost-effective ways to protect yourself and your family.