Last Updated on May 21, 2021 by MoneyVisual
Income protection insurance – an insurance policy that ensures you get 75-85% of your earnings if you’re unable to work due to illness or accident. It ensures you receive a regular income until you recover from your injury and get back to work.
Buying an income protection policy can be very beneficial but it can be costly if you don’t make the right choices. So it is always a good idea to consult someone who knows about it or maybe do your fair share of research online.
As someone who provided some of the best online income protection quotes in Melbourne, I have responded to many concerns of my clients. And today, I am going to share some of the red flags that you should look out while considering to subscribe for an income protection cover:
Don’t Give Up because it Seems Expensive
Income protection policy might seem expensive but it will benefit you in the long run. The long term income protection cover will pay out until you reach retirement age, but the premiums are high. If you think it does not fit within your budget, you can consider short-term cover which can cover you for one or two years if you are unable to work. There are many options that you can choose according to your budget so not buying it is never an option.
Confusing Income Protection with Payment Protection Insurance
Buyers usually get confused with Payment protection insurance and income protection insurance because they look and sound like similar policies but they have many differences. Income protection policy can payout for a longer time and has a lower level of risk than that of Payment Protection Insurance.
Skimming Over Policy Documents
The policy documents may seem unappealing to read but you can’t escape this one. It is important to read and understand your insurer’s product documents before buying it. Don’t rush while buying the policy, take time to read the documents, so that you know about the cover you have, both inclusions and exclusions.
Not Looking Out for Rewards
The insurance company provides rewards and promotions, you can be unaware of those. Don’t feel shy to ask your insurer if they provide any rewards for new customers or existing customers.
Failing to Disclose Relevant Information
When applying for an insurance policy, you have a duty of disclosure. You have to mention all the truths to the insurer. Hiding the truth might save money but it’s definitely going to haunt you when it comes time to make a claim. Give all the correct information about your pre-existing health conditions to ensure there are no issues if a claim is made.
Note – If the insurer believes that you did not fully disclose all relevant information, they may cancel the policy or refuse to pay an insurance claim, so be honest (that’s the best policy).
Not Taking Any Professional Help
Finance and Insurance is not everyone’s cup of tea if you are one of them no wonder you are going to face difficulties while dealing with these policies.
Taking professional help before making your decision is a great choice. Consultants provide you with quality advice which is backed by documents. If you want to discuss this further, comment below, reach out to us here or write back to me and I will be more than glad to help you.
Assuming Income Protection Covers Redundancy
People usually think income protection covers redundancy which is not true. The objective of income protection policy is to cover you if you are off work due to sickness or accident. But if you want your redundancy to be covered, you can add unemployment benefit in your policy.
When an unexpected situation occurs in life, the last thing you want to lose is your pay and in such situations, income protection insurance will cover you. Make sure you avoid these mistakes when buying an income protection insurance to have the important things covered.
While income protection is very beneficial for your family in times of need, you should be careful while subscribing to one. It’s better to discuss your needs and financial condition with more than one insurance agent or agency before subscribing one – or maybe research online and make a smart move.
Christian Taylor is an assistant insurance agent at Aspect Underwriting, a boutique insurance agency in Melbourne. Apart from helping individuals and companies get their heads around various types of insurances and find the best fit, he is an avid swimmer and loves to eat all the good things in fries and Tex-Mex dishes!