Purchasing Income Protection Insurance
Article published on 19th May 2008
Over the next few articles we be looking at the sorts of things you should bear in mind when looking an income protection policy.
First of all, be sure not to confuse income protection with mortgage payment protection insurance (MPPI). These plans tend not to be as good as income protection and they're often more expensive too. With an mortgage payment protection (MPP) policy you can generally expect for the plan to have some pretty heavy exclusions and it's unlikely that it will pay out for more than one year.
Also, always check the vitally important ‘occupation class’ of the income protection policy you are looking at. This is what your insurer will use to decide whether or not to pay out on a claim. There are various definitions out there, but the most inclusive are referred to as ‘Suited Occupation' and ‘Own Occupation', while ‘Any Occupation' tend to be the least advisable for purchase.
If you get an ‘own occupation’ class it means that you can claim if you can't do your job for whatever specified reason, while being covered for ‘any occupation’ means you can't work at ANY occupation at all - and rest assured it can be tough to prove this if your insurance company is sceptical, unless you are confined to a hospital bed, blinded, in a coma or something equally severe. If you can sit at home working at telesales of posting letters, or if you are able to stack shelves at the local supermarket, chances are you wouldn't be eligible for a pay out. Your salary previous to your incapacitation will not be taken into account.
Remember, if the policy you are looking at does not stipulate your 'own' job or else work that is otherwise ‘suited’ to you, be sure to seek out an independent advisor before signing anything you might come to regret.
Finally, be sure that you are aux fait with all the benefits you might be entitled to from your employer or from the government if you are injured on the job or whatever. These factors are likely to be considered in your policy and affect how much you can be insured for. Basically, the longer your employer or the state pays you for sick leave (or whatever), the longer your policy deferment period is likely to be. This, in turn, will likely reduce premium costs.
Please feel free to contact one of our advisor's for friendly free financial advice on 0808 1782 777.
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