When it comes to buying an income protection policy you shouldn’t just settle for the first one that comes your way. Since it will be used to cover you in those difficult times you are unable to work due to an illness, injury, or disability you will have to get something that understands you and your financial needs. Here are six features to look for in an income protection policy to see if it is the right fit for you.
According to the Sydney Morning Herald, it takes 70% of Australian workers to find a job within a year, with 1 in 3 being paid less than their previous jobs. Not all income protection policies come with a cover that will cover you if you become redundant. You will have to supplement your income protection with another policy that will help cover you if you have been made redundant.
Getting an income protection policy that understands those tough financial moments that come when you are unable to work is important. This feature is helpful when your finances have taken a dip and you are unable to meet the payments on your premiums. If you receive a total or partial disability benefit, then you won’t have to pay any premiums on your income protection insurance.
Cover for rehabilitation purposes
If you are recovering from an injury or an illness the last thing that you would like to accompany your physical pain is the mental pain of the accumulating bills you will have to pay off. Check to see if your income protection plan has you covered for rehabilitation expenses.
The benefit period
This is basically the length of time that you select where you wish the policy to substitute your salary for a set period. There are two periods you can choose between, which is a policy that extends between 2 or five years. You can also determine the age that you would like the policy to last up until. Most policies last up until you turn 65.
If it keeps up with inflation
You don’t want to live on an income protection plan that stays the same when the Retail Prices Index is forever changing. Find a cover that has an index lined premium to ensure that the sum you have insured for holds its value until your policy expires.
Make sure that you are covered on the legal side of things so that you are not short changed when you need your income protection the most from your insurer. A non-cancellable policy will prevent insurers from cancelling, or lifting the cost of your premiums. If you comply with the terms of the contract this will prevent insurers from going as far as reducing your benefits.
However, to get a deal that matches your need and your money you will have to shop and compare. Always ask your insurer questions regarding the policy and never sign a contract without fully understanding it.