This is the provision of an income in place of a salary during an employee’s absence from work due to illhealth. It is usually payable after a deferred period, which would come into effect as soon as the employer stops maintaining the employee’s full salary, i.e. three, six or twelve months.

It is relatively expensive and the underwriting requirements are usually quite stringent. It is therefore commonly provided only to specific key individuals in the business.

As with all types of assurance, costs and the terms and conditions vary tremendously. It is therefore very important to ascertain exactly what benefit is required and to research the market thoroughly before taking out this kind of contract.