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The length of a benefit period
When you take out an income protection policy you have the choice of choosing between a 2 to 5 year benefit period. The length that you choose will affect your premiums. A longer benefit period usually comes with higher premiums. A shorter period means that you will have lower premiums, but the pay-out will be for a short time. Therefore, you need to carefully consider your period. Speaking to a financial advisor or your insurer will help you know which will be more suitable for your lifestyle or the type of occupation you have.
Considerations when choosing a benefit period
To get the most out of your benefit period it is important that you consider various factors such as being able to manage your everyday living expenses and how you will be able to pay off your bills and debt. Always keep in mind that your income protection policy is something that will take the place of your salary when you are no longer able to receive one due to falling ill or sustaining an injury. Therefore, all the expenses that you had to pay when you were still receiving a salary need to be taken into consideration.
Be aware of the waiting period
Being aware of the fact that there is a waiting period before you will be able to access your income protection will help you better prepare your finances. The typical waiting period varies from 14, 30, 60, and 90 days. Your insurer will only be able to approve your claim once they have been given the go-ahead by your medical practitioner who will be able to vouch that you are unable to work due to an injury or illness you have.
What can cause your benefit period to end?
When taking out a policy the three main important things you need to know is; how much will it cover you for, what features does it come with, and what will cause it to end. When it comes to your income protection policy, the only reason why it will end is because:
- Your policy has expired which means the policy has been cancelled due to you not paying your premiums or cancelling the policy yourself.
- You have returned to work due to your injury or illness becoming better, allowing you to work.
- You have passed on and your policy doesn’t include any beneficiaries.
- You have breached your contractual agreement. Your insurer can cancel your policy if you have breached the agreement that is outlined in your policy or if you have handed in false information.
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This guide provides general information and does not consider your individual needs, finances or objectives. We do not make any recommendation or suggestion about which product is best for you based on your specific situation and we do not compare all companies in the market, or all products offered by all companies. It’s always important to consider whether professional financial, legal or taxation advice is appropriate for you before choosing or purchasing a financial product.
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