When offered income protection insurance, we often take it for granted that it will cover any eventuality. However, this isn’t always the case. If you aren’t going through an insurer or broker whom you entirely trust, it might be worth reading through your policy. Of course, many companies offer incredible income protection insurance at much lower premiums than many other types of insurance, but that doesn’t mean you don’t have to be careful. Today, we want to talk you through some things everyone should understand before agreeing to their income protection insurance.
Before we begin, this isn’t to say that all insurance companies are out to get you. In fact, the majority are incredibly trustworthy and helpful, especially when it comes to paying out income protection claims. However, we want to highlight what can go wrong if you use an unreliable company and don’t read their product disclosure statement (PDS).
Policy definitions – This is something that many people accidentally look over when purchasing insurance from an untrustworthy source. It is crucial to always go over the definitions in their contracts. For example, an insurance company might class a disability as something that is preventing you from working, whereas another will define it as something stopping you from one line of work, making it difficult to claim.
Waiting times – It is always crucial to check the waiting time that you expect to receive a claim. Sometimes, if the waiting time is too long, it is time to go back to work before any funds are received.
Benefit caps – Be careful of a policy’s benefit cap (if there is one). This can prevent you from claiming the total amount you need and expect from income protection insurance.
Non-financial impact – As income protection insurance primarily focuses on loss of income, some policies may not include additional medical expenses. If an insurance company can’t offer the two together, it may be worth looking elsewhere.
Exclusions – It certainly pays to be mindful of any exclusions a policy might have for specific injuries and illnesses. As we said, a reputable insurance provider will cover pretty much anything, so have a careful read of what is really on offer.
Don’t be too put off
Although it is handy to have an insight into what to look out for when purchasing income protection insurance, don’t be put off from using it. Income protection insurance is one of the most valuable policies you can have. All over Australia, people have felt its tremendous benefits. It is one of the only policies that don’t increase in price the more you use it, and it offers rewards if you don’t claim on it. There are some incredible insurance providers out there, so take your time and read through some policies before making that all-important decision. Income protection insurance is certainly something that nobody should be without.
