Income Payment Protection - Long or Short Term

Article published on 17th December 2007

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An Income Payment Protection Plan, is an insurance contract that will pay a monthly income if you cannot work usually due to accident or sickness (although redundancy cover is sometimes available as an add-on).

There are two forms of Income Payment Protection: Long Term and Short Term. A short term plan will pay a monthly benefit upon receipt of a valid claim for a maximum of 12 month (some companies offer 24 months), where a long term plan can pay a claim up until your selected retirement age (50-70).

Which One Should I Choose?

As an insurance brokering service, Top Quote UK Financial Services are authorised to compare the two products and we find that both have a significant place in the marketplace and that it depends on the individual's situation.

The advantage of a short term plan is that the policy can be setup almost immediately with no underwriting. This means that a policy can be applied for and usually started the same day without them writing to your doctor, therefore in event of a claim, they would write to you doctor and assess your background; usually excluding any conditions suffered in the last 12 months. A short term contract also does not base price on age, occupation, smoker status or health, so you may find this a cheaper option.

With a long term plan, applications are underwritten before a policy starts, so it can often take a few weeks to set up a plan. The advantage of this is that all of your medical background is taken into account and accessed before the policy is setup. This means that should a claim occur, your medical records have already been accessed, although they will still want proof from your doctor about you illness. With long term plans, any exclusions will be put in writing to you before you accept a contract and any valid claim can be paid up until you selected retirement age. A Long Term plan may cost slightly more as it is a comprehensive policy and takes into account many factors, however you are more likely to have a longer claim on a long term income protection policy than a short.

Income Payment Protection - The Verdict?

There is no doubt that the long term contract is a better policy, however prices are based upon you occupation, gender, health, etc. If a long term policy is financially viable, we would highly recommend this cover be considered. If however the long term policy works out too expensive, we would still recommend a short term contract, as it is better to have some cover in place rather than none at all.

In order to get an Income Payment Protection Quote Online, please visit our Income Protection Quote page, or please feel free to contact one of our friendly advisors for financial advice on Income Protection Insurance free on 0808 17 82 777.

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