The nature of life means that the unexpected can strike at any time, leaving you in a situation where you might be unable to work due to injury or illness. Income Protection Insurance will provide you with regular payments of up to 75% of your income until you’re able to return to work or until the benefit period expires. This means you’ll be able to keep up with payments while also maintaining your lifestyle.
But what should you look for in an Income Protection policy? We’ve included some helpful hints so you know what to consider and what your advisor is talking about when taking out Income Protection cover.
What do I need to look for?
When choosing Income Protection Insurance, consider the waiting period for the policy before you can claim. This is usually around 30 to 90 days. If you have a considerable amount of sick leave available, you may be happy with a policy that has a longer waiting period. However, if you don’t have access to a lot of leave, a shorter waiting period would be better so you can start receiving payments fairly quickly. This might be particularly important if you are self-employed.
You will also need to look at the length of time, known as the benefit period, which a particular Income Protection policy will continue to provide payments. All policies have limits and can vary from one or two years, or until 65 or 70 years of age depending on your occupation. Check the benefit period and try to opt for the longest length of time that you can comfortably afford. This will give you peace of mind if you do find yourself unable to return to work indefinitely.
The most common Income Protection insurance policies cover both accidents and sickness. However you can opt to choose a policy focused only on protection if you have an accident. This may be necessary if you are unable to obtain a policy to cover you for sickness due to a pre-existing condition or health issue. Or you may simply want to save money on premiums and only cover yourself for accident or sickness, not both.
Before you sign up with Income Protection, consider how much you can afford to pay on premiums. You don’t want to be in a situation where you have the top level cover but are struggling to pay for your policy. Also, think about how much money you would need if you are unable to work and ensure your policy would cover this amount. Consider expenses such as mortgage, bills, vehicles and any other major costs. If you consider this before signing up, you won’t be caught short if you ever need to claim. You should also check that the payments are indexed to match inflation so that if you have a long term claim, the benefits increase each year along with inflation.
Making it easy
Choosing Income Protection insurance can be overwhelming at times and there are many factors you need to consider. At Perth-based Tradecover WA, we take out the guess work by helping you choose the right level of cover for your needs. We’ll take into account your personal circumstances to ensure you get the best fit with your Income Protection policy.
For information regarding Income Protection insurance, call us at Tradecover WA Financial Services and we will be more than happy to help.