How exposed would your household be if you couldn't work?

Two questions decide most of what you need to know before you talk to an insurer or an adviser. How long could your household manage if your income stopped tomorrow? And how much would a policy need to pay out each month to actually cover what you spend?

The first question turns on things you already know: what you've put aside, what you spend each month on the outgoings you can't easily cut, and whether any sick pay from an employer or the state would carry you for a while first. Put those figures together and you can see how many weeks your household would last, and which deferred period it could actually sit out. The deferred period is the gap between stopping work and a policy starting to pay.

The second question turns on your earnings. A policy's monthly benefit is capped by insurers as a share of your pre-tax earnings. The amount that would cover what you spend isn't automatically the amount an insurer would agree to pay. How much cover, and for how long? explains how your outgoings sit against that cap, and what a limited-period policy and a to-retirement policy each leave you exposed to.

Working from your own numbers

Before you run those figures, you can understand how long you could survive without income in the guide that sets out what decides it, then bring your own numbers to the calculator. The deferred period calculator takes the figures you enter and runs the arithmetic in your browser, so nothing you type is sent anywhere or kept. What comes back depends entirely on what you put in, and like any calculation built on assumptions about your spending and your sick pay, it can give you the wrong answer if those figures are off or if your circumstances change before you check them again.

Once you have a number in front of you, the policy itself still turns on how an insurer defines being unable to work. What 'unable to work' means in a policy sets out the three tests a claim is judged against: own occupation, suited occupation and any occupation.

Knowing how much cover you need and what it costs only gets you partway to the decision. Whether it actually pays out, and how much it leaves you short of, comes down to a handful of specific settings and rules that sit underneath the headline figures.

• The claim definition your policy uses decides whether an illness that stops you doing your own job counts as a successful claim, because insurers test you against your own occupation, a suited occupation, or any occupation at all.
• How insurers treat variable income changes what you can actually claim if you're self-employed, since most average your earnings across several years of accounts.
• What statutory sick pay covers is lower than most people expect. It pays the lower of the flat weekly rate and 80 per cent of your normal weekly earnings, for up to 28 weeks, and it isn't available to the self-employed at all.
• How a claim is assessed once you stop working depends on when you tell the insurer, what evidence they ask for, and what happens if you go back to work part time before you're fully fit.

Before any of these settings matter to you, it helps to understand how long you could survive without income in the first place. The deferred period calculator does the same sum with your own savings and outgoings, so you can see which deferred periods your household could actually get through.

The three claim definitions are worth reading in full before you look at any quote, including the jobs where the difference between them decides whether a claim succeeds. You can read them on What 'Unable to Work' Means in a Policy.