An ongoing income is important to maintain your lifestyle. Income Protection gives you a steady stream of income if you’re unable to work due to sickness or injury.
Many assume that ACC will take care of them if they can’t go to work. ACC only provides cover for injuries that are the result of an accident. Income protection covers non-accidental reasons for being off work, such as stress (the biggest cause of people needing time off).
Some of the questions we frequently get asked relating to income protection….
What is the difference between agreed value and indemnity cover?
Agreed value policies require you to prove your income when you apply for the policy –generally an average income over over two or three years. This can work well for self-employed people with fluctuating incomes.
Indemnity policies require you to prove your income at the time of a claim. These policies can be a little more efficient in certain situations and as a general rule they can work well for people who are employed with a steady income.
If you want to know more about your Income Protection plan or what may suit your situation please call Risk Solutions.
At claim time – how long do I need to wait before I get any money?
You choose. Most people go with either one, two or three months.
Your wait period has an effect on how much you pay in premiums – the shorter the wait period, the higher the premium. This is why it is important to consider how soon you would need the money if you got sick and couldn’t work.
Most insurance providers pay their income protection policies in advance. For example, if you have a one-month wait period and are off work for a month, your policy will begin paying at the end of one month. Others pay in arrears, which would result in you not receiving your payment until you have been off work for two months.
How long does it pay out for?
Once again, there are lots of options when taking out a policy. In general we recommend that the payment term is through to retirement age. This ensures that if you make a claim you will keep receiving your money until your doctor clears you to go back to work . In the event that you never return to work you will continue to receive money right through to the age of 65 or 70.
In certain situations it can be prudent to have a shorter payment term, for example, a person may have some alternative income or another type of insurance policy that will work in conjunction with a short payment term. There really are many options.
At Risk Solutions, we take the time to work through the options with you and come up with a plan that will work for you and your family.
