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Income Protection Insurance
Income protection insurance ensures that you receive a portion of your income if you become ill, injured, or disabled, and are unable to work. This helps you cover essential living expenses and ensures financial stability until you're able to return to work.
*Income protection is essential for those who are self-employed, have minimal savings, or want to ensure long-term financial security in the event of unforeseen circumstances.
How Does Income Protection Work?
Once your plan is set up, you pay a monthly premium. If you're unable to work due to a covered illness, injury, or disability, you start receiving benefit payments after a set waiting period (deferred period). The amount you receive and the duration of your benefits depend on the type of policy you choose. This financial protection allows you to continue paying for essential costs like:
- Mortgage and rent payments
- Utility bills
- Childcare expenses
- General living costs
Key Terms You Need to Know
Deferred Period
The deferred period is the waiting time between when you stop working due to illness or injury and when you start receiving benefit payments. It acts as a safety mechanism to prevent abuse and ensures that the policy is used for serious or long-term conditions.
Deferred periods can range from a few weeks to several months, depending on the policy. A longer deferred period typically lowers your premium but means you'll rely on savings or other financial resources during that time.
Claim Periods
Claim periods determine how long you can receive benefit payments once you become eligible due to illness, injury, or disability. The options typically include:
- 12-month claim period
- 24-month claim period
- 60-month claim period
- Full claim period (indefinite until policy expiry)
For shorter claim periods, you may be able to claim again after a 6-month gap, or sooner if it’s for a different condition. Selecting the right claim period is crucial for long-term financial stability.
Income protection policies are subject to terms, conditions, and exclusions. Ensure you fully understand the policy details and consult with an adviser before taking out income protection insurance.
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