Your 6 Point Check List For Income Protection
There are some important points with income protection that you should check on any policy to ensure that your policy is right for your needs and it is the very best cover for the lowest possible price.
Own Occupation Vs Any Occupation
Own Occupation - This means that the cover is based on you being unable to do your specific job and in the event you need to claim on the policy the requirement is usually to be signed off of work by your doctor.
Any Occupation - This means that the cover is based on you not being unable to do any type of work at all. In the event of a claim on the policy the requirement is usually a series of tests from the insurance company to assess if you are fit to work.
Own occupation is a better definition and it is important to ensure that your policy is on an own occupation basis, otherwise this could effect your ability to claim.
Guaranteed premiums are set at outset and once the policy is up and running these premiums cannot then be changed by the insurance company.
Some policies have reviewable premiums. This means that at periodic intervals (such as every 5 years) they can review the premiums and change then (usually by increasing them). Reviewable premiums are usually slightly cheaper at outset than guaranteed premiums, however this can be a false commodity as you end up potentially paying a lot more in the long run.
Level or Increasing
Having a level policy on a level basis means that your cover stays the same and therefore in the event of a claim your cover will not increase. This is generally fine for short term claims, however if you need to claim long term your money will be effected by inflation (the cost of living increasing) and this in turn can make your poorer each and every year.
If your policy is increasing then it will go up each year by a set rate (eg. RPI, 3%, etc) this means that in the event of a claim your money would continue to increase and help protect you against inflation.
You set income protection to a specific retirement age (say age 60). You should check what age yours is set to...... Is this realistic or will the policy lapse whilst you are still working?
The deferred period is the time between you becoming ill and then the benefit of the policy starting to pay out. Usual deferred periods are day one, 4 weeks, 8 weeks, 13 weeks and 26 weeks. You should find out what your sick pay is, as the income protection will not pay whilst you are still receiving 100% of your income through sick pay and if this is the case you could consider increasing the deferred period as this would reduce the cost of the policy. You should also think through what is realistic and how long you come cope for financially without income? Who would pay your bills? What external financial support do you have? And how long would it be fair to ask for that to continue (say money from family)?
Have You Had It Price Checked In The Last 2 Years?
Rates for income protection change and as new companies enter the market for income protection for vets this has the effect of pushing prices of new policies down. It is therefore common that you can actually decrease the price of your policy whilst keeping the quality of the policy the same (if not improve it). This has been a common trend in the last few years, so you should check this to ensure that you have the best policy for the lowest possible price. Use our Income Protection Comparison Tool Below. We will check the findings for you and email you back with our findings:
Income Protection Comparison
Premier Financial Planning Ltd, Unit 5, Manor Farm, Chilmark, Wiltshire, SP3 5AF, 01722 717427