Will being ill affect your income?

Unless you own your own business and have lots of people earning money for you on a long term basis, the answer is probably “Yes”.  But even then, will your staff members stay with you or continue to give their all if you’re not at the helm to give them guidance?

For the rest of us, an Income Protection Plan (IPP) could be the answer to the question, “Who will pay me if I am unable to work through sickness or disablement”?

There are many issues but let’s just highlight two.

Firstly, Some policies have a minimum deferred period, which is usually in line with the government’s definition of ‘long-term illness’ of four weeks.  While that’s financially manageable for some people, it is simply not realistic for everyone.

So that raises the question, if your had to wait four weeks with only limited funds before you can start claiming your income protection cover, will you still be able to meet all your pre-existing financial commitments?

If not, it’s worth considering a policy which has cover much sooner, or even from day one.

Alternatively, if you have a rainy-day fund to hand, you might prefer to extend your deferred period in order to reduce the monthly premium.

Secondly, another point is that traditionally, income protection has been sold on a long-term basis, which allows claims to be paid right up until the client’s retirement age.

But insurers are increasingly offering limited claim periods of one, two or five years, which can dramatically reduce premium costs.

While limited claim periods provide less comprehensive cover, you can still have multiple claims for different illnesses or injuries.

The importance of claim periods lies in giving you more choice and flexibility when it comes to choosing between income protection policies.

Not all clients would require, warrant or need a limited claim period, but it’s worth keeping your options open where the situation applies as there are potentially great savings to be made.

If you would like to explore this subject further, why not contact us for a chat?  There are a myriad of nuances to consider.