Guide to Income Protection Insurance – part 4 of 5
Before you buy an income protection policy it's vital to consider whether a policy is really right for you and whether the level of cover will meet your needs. Let's take a look at some more things to consider.
Things to consider continued…
- Age factor - Most policies will insure anyone aged 18-65, however, there are specialist policies available for the under 50s. If you are under 50 you are deemed less likely to make a claim and consequently your premium should be cheaper.
- Payment period - Most policies will only pay out for 12 months but this can vary.
- Payment excess - Some companies will offer you "excess" that will cut your premium. This means that they will not pay out for a set period - perhaps 30 or 60 days. The longer the excess, the less you pay on a premium, but consider how long you can afford to go without these debts being repaid on your behalf. There are many good policies available that will pay out from the time your problem begins, ie no excess.
- Will they pay an enhanced rate - Interest rates on a loan or credit card can fluctuate. Make sure your insurer will cover any potential rise.
- Introductory periods - Some insurers will not pay out for the length of an introductory period, which can be as much as three months.
- Unemployment restrictions - Is there anything that could stop you from making a claim if you were to lose your job? For example, is unemployment a regular occurrence in your chosen profession or do you have a seasonal job?
- Pregnancy/childbirth - Generally, you will not be able to make a claim in these circumstances.
- Short-term employment - Some insurers might suspend payments if you are able to get short-term work and restart them once this period ends. Not every insurer will do this.
Above all else, as with any form of insurance, thoroughly read the terms and conditions of your income protection policy. Make sure there are no loopholes and that you will not be short-changed in the event of a claim.
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