I ask because I recently got sick. Last summer I suffered a stroke (I’m 23) and couldn’t work for 3 months. This year I’ve had to deal with a number of consequences of the stroke, the most serious of which is epilepsy and being prone to mental and physical exhaustion.

This exhaustion can take me out of pretty much everything (including this blog). I’m only just starting to get back on top of things after the last bout. That’s by-the-by however.

The point is I had to make sure I could have money coming in if I couldn’t work for a spell. Most employers offer sick-pay – where you get paid for a period of time if you get sick. Usually the time period sucks. Some employers offer a form of enhanced sick pay benefit, in the form of a salary-sacrifice scheme. That is, you give up a portion of your monthly wage to fund the scheme which gives you sick pay for a greater length of time. In my case, I would get 3 months full pay and then 12 months half pay instead of just 3 months half pay. By enrolling in the scheme, I ensured I had enough money coming in to pay my mortgage and utility bills.

Covering the very basics is all fine and well, but it would leave things rather tight. Plus, would you really want all your proverbial eggs in one basket? When taking out credit, many lenders will try and sell you unemployment insurance. The idea here is that for an extra premium, your repayments will be covered in the event you find yourself unable to work (through sickness or unemployment). My understanding of this type of policy is that if you ever do need to use it, your credit rating will be severely affected.

Another, more extreme type of cover is Critical Illness Cover. CIC is generally part of a life insurance policy. This type of policy will payout a large lump sum (usually tax free in the UK) in the event you suffer a “critical illness” as defined by your policy. Usually this includes stuff like heart attacks, cancer, most terminal illnesses… and strokes. I didn’t claim on mine. The only issue with CIC is if you ever need to claim (assuming you will survive), that’s it, you’ll likely not be able to get much in the way of CIC again, which can effect your chances of getting something like a mortgage. It was because of this and because I was going to make a full recovery that I didn’t claim on mine.

One final way to cover your self should something happen. One final way – and one which I am working on realising – is to have streams of AIS (Automated Income Source). I’ve talked very briefly about having systems that work on auto-pilot, but not in depth. Examples of AIS systems include niche content websites with advertising revenue, affiliate schemes, and selling information products with an payment/automated download system.

These are just some of the ways you can protect your income if you get sick for an extended period of time. As always, you should seek independent financial advice before making any decisions.

I didn’t used to be overly concerned with insurance – I was generally a careful person, so didn’t see much point in it. Certainly insurance in the form of “extended warranties” are a bit of a waste of time and not worth the money you pay for them.

However, there are some kinds of essential insurance – some are mandatory in some situations while others are just good to have. The essentials are (IMHO):

• Buildings & Contents Insurance (for home-owners)
• Car/Motor/Auto Insurance (for Drivers)
• Life Insurance, including Serious Illness cover

Buildings Insurance is just for Property Owners, and covers you in case something happens which destroys your building or otherwise makes it unusable. Mortgage companies generally require you to take Buildings Insurance – sometimes with a certain “partner” company, but not always.

Contents Insurance, covers the contents of your home – all your possessions, really. Contents insurance often comes with your buildings insurance (if you have it), but not always. I had to make a claim on my contents insurance today after my wife accidentally broke my iBook. With a broken screen and seemingly something on the inside broken as well, it looks like a replacement will be needed – something I simply don’t have the money for!

My wife also had an accident in the car last week (she’s not been having much luck recently!), causing about £2000 worth of damage. Car Insurance, which is ususally a requirement of owning a car, is paying for the damage. A £2000 repair bill would have sunk us for at least the rest of the year, if not longer, so it’s a godsend the insurance is paying for everything.

Life Insurance is probably the least tangible on this list. You don’t directly benefit from it, yourself. Generally, if a claim is made on your life insurance, it means you’re dead. Life insurance is a way of providing for your loved ones if you happen to snuff it somehow. I whole-heartedly encourage you to take serious-illness cover with your life insurance if you can. This provides you with protection against being unable to work due to a life-threatening illness (heart conditions, cancers, and the like). Life insurance is, in my experience, a requirement when buying a house. Certain policies can also act as a kind of investment – paying out a lump sum to you if you’re not dead by a certain date (charming!).

Being properly insured can save you a fortune in the unfortunate event something should happen. If I’d not been covered, I would be looking at repair bills off around £3000 in the next few weeks. The monthly premiums for my insurance policies is a small price to pay in comparison. If you aren’t properly covered, I suggest you take a look at your options. You’re always paying for “what if?”, but if “what” happens you’ll be glad you were paying.