A policy designed to pay an income after specified period of illness that prevents you from carrying out your occupation and until you make a recovery or the policy reaches the end of its term. Payments of income are tax free under current Inland Revenue rules of taxation. With the exception of DSS benefits, earned income from other sources will be deducted from benefits payable. For example, your employer may pay your salary for a number of months, therefore it is important to set up your income protection policy to pay benefits when payments from your employer stop.