As we mentioned in a previous blog, Income Protection will provide you with a % of your regular monthly income if you are unable to work through critical illness or injury.
Because everybody has different needs and different risk levels, insurers will require some detailed information from you to be able to provide the cover you need and this information will naturally affect the price of your premium. Here’s a few things they’re likely to ask.
How long you would like your policy to run for
Typically this is through to retirement but a shorter policy is likely to reduce your premium
How much you would like to be covered for
Insurers are happy to cover you for almost any amount you wish. So if you say you currently have a £200k salary, that’s what they will cover you for. But be warned.
Regardless of how much you are covered for, in the event of a claim you will have to produce documented proof of your income and if it is only in fact £20k, regardless of the level of cover you purchased – you will only be paid a % of your real earnings.
Whether you want your cover to rise in line with inflation
This is a great idea, especially if the length of the policy is significant
The waiting period
The waiting period dictates how long after an accident or commencement of illness you would like the policy to kick in and beginning to pay-out. Obviously the longer the waiting period, the lower the premium is likely to be.
All occupations are graded as to the risk they pose to illness, injury and even death and this will have a direct impact on your insurance premium
Your medical history
It’s crucial to give your insurer accurate medical history as in the event of a claim, any hidden conditions will be uncovered through the insurer’s investigations prior to a claim being actioned.
If you have an existing condition, your insurer may still provide cover for an additional premium.
This is very important. Own occupation will pay out if your illness or injury prevents you from being able to carry out your main occupation (even if you could still work in a different role).
The alternative cover is “Any Occupation” which means you will only receive a payment should you not be able to work at all.
Some other important things to consider
IP does not cover you for pregnancy, redundancy or job loss, injury or illness relating to alcohol or drug misuse or pre-existing conditions (unless agreed).
Some insurers however will provide cover at an additional premium for redundancy.
Income Protection can be a complicated topic and it’s important to really understand your needs before jumping in to a lengthy commitment. At Credius, we provide expert independent advice and have access to a wide portfolio of products, you can find out more here on our website or why not contact us today at email@example.com or call on 020 7562 5858 for a free consultation today.
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Next time – Income Protection for Company Directors