In the event of sickness, a permanent health insurance (PHI) policy may be more suitable.

Most insurers cover up to 75% of earnings but some have begun to drop their limits since the government waived tax on income replacement pay-outs last April. Norwich Union, for example, insures only 60% of salary.

You should also be aware that benefits are usually payable only when the insured is unable to do any job, rather than your normal job or one you have trained for.

Common exclusions from PHI cover are pregnancy and childbirth, alcohol, drugs or self-inflicted injury, HIV and Aids and war risks.

The policyholder can decide how long they wait before the policy pays out. Income can be deferred for between four and 104 weeks, but shorter deferral periods mean higher premiums.

Premiums are often 50% more expensive for women as statistics suggests they are more likely to claim. However, female borrowers can get a better deal from insurers such as Legal & General which do not load women's premiums.

Choosing the right policy at the outset is vital as switching insurers becomes more difficult as the policyholder gets older or develops medical conditions.