Income Protection Insurance Checklist

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Indeed, it could be worthwhile to have your income protected. If you’€™re considering to get income protection insurance, here’€™s a few list to check before doing so.

Before buying income protection

  • Many employers offer group insurance policies that could pay out your salary if you’€™re away from work for a long time. You should check with your employer if you are covered for this type of insurance.
  • If you have two income protection policies, your total payouts will be restricted. Also, if you are receiving state benefits, this could be deducted from your payout, so make sure you don’€™t over- insure.

Buying income protection

  • Shop around, especially if you’€™re a smoker. Most providers charge 50% more for smokers. Find a company which doesn’€™t charge extra premium for smokers, or at least one that charges a lesser amount.
  • Disclose every important information, especially health- related ones. Forgetting to report even the smallest detail, from a childhood illness to high blood pressure can cause you to have your claim denied, even if you actually qualify for it.
  • Determine how the premiums are charged. Before finalizing the policy, make sure you understand if the premium is guaranteed throughout the policy, if it is reviewable, or if it changes in relation to age or inflation.
  • Choose own- occupation cover if possible, so it can pay out if you’€™re unable to do your own job. Avoid those policies that offer ‘€œactivities of daily working’€ or ‘€œactivities of daily living’€ as they don’€™t often pay out unless you become totally disabled to perform basic tasks.
  • Try to cut costs. If you think you can’€™t afford the premiums, consider extending your deferred period, reducing your monthly payout, or look for a full, short- term income protection.
  • Consider a stip policy. This means buying income protection and short- term income protection together, since an IP policy with a long deferred period is cheaper than a policy with a short deferred period.
  • While most income protection providers pay your premiums for you while you’€™re still receiving payments, most ASU policies don’€™t, so you better check out if your premiums are waived.
  • Inquire about ‘€œback to work’€ assistance you might receive with a successful claim, such as counseling and rehabilitation. If you’€™ve been disabled, it’€™s only appropriate to have those benefits included in your policy.
  • Seek independent advice. Income protection insurance can be a complicated and tricky business. Most often, it could also have an effect to your state benefits, so you need to have an expert advice before deciding to buy a policy.

After the policy is bought

  • Review your policy regularly. You should be keen about policy changes that could affect your benefits. Furthermore, if you changed jobs, you should notify your provider for any changes in salary, so that your premiums and benefits could be adjusted.
  • If you switched providers, don’€™t cancel your old policy until a new one is in place, or you might end up without a cover.

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