During a recently available financial review with a brand new client, something I carry out with all new clients, I asked the question concerning whether he had any income protection in place. I was quite surprised and impressed when he explained he had. It’s not usually the first thing young adults think of and this man in his late twenties had it sorted…or so I thought. He quickly followed this with “I think I have that with my mortgage protection “.Ah ha. It wasn’t the first time I’d heard this and I’m sure it won’t function as the last. Indeed perhaps we as Financial Advisors and whoever sold him the initial policy are to blame. And so I attempt my task for today to educate the general population or at the very least anyone looking over this on the difference between Income Protection and Serious illness.
Income protection is in general a standalone policy. It is not usually linked to your mortgage although it may be used as a payment protection policy in some cases. Serious illness cover or critical illness cover as additionally it is know may be either standalone or incorporated into a life policy or mortgage protection policy. Schwere Krankheiten Versicherung This really is where in actuality the confusion above often arises. This client specifically had taken out a mortgage protection policy some years back through the lender where he got his mortgage and during the time he was also offered serious illness cover as an option. This sort of policy is also a lot cheaper when you’re younger and so he opted to go with this for a comparatively low premium.
Serious illness cover will spend a lump sum on diagnosis of certainly one of a list of serious/ critical illnesses. Each company has their particular list and they differ slightly so you need to always check that you’re getting the best cover. The main illnesses that they’d all cover would be cancer, coronary arrest and stroke but most list around 40 approximately different conditions. In case of a claim the insurance company would spend a lump sum payment. You could use this to clear some funds off your mortgage, clear loans, fund necessary treatment you might require or for general living expenses in the event that you are unable to benefit an amount of time. Generally speaking this cover is very good if you need money quickly to clear a loan or your mortgage or if the condition is short-term and you have the ability to return to work immediately after but when you were struggling to work again the lump sum may not be going to last very long.
Income protection on the other hand gives you a regular income in the case of you being underemployed for a lengthy period of time. It’d cover any illness or injury which leaves you struggling to work. Yes any illness or injury including those included in serious illness cover. It can pay you right up to retirement or and soon you return to work. In some instances your employer may pay sick purchase a given period although there’s no obligation in law. Seriously worth taking into consideration is Income Protection insurance. Cover kicks in once you’re underemployed for more than the specified period which is often 8 weeks, 13 weeks, 26 weeks or 52 weeks. The longer waiting periods are well suited for anyone who may be paid for 6-12 months by their employer. You can have the income protection coincide with this such that it would activate then ensuring no gap in your income. The maximum amount you can claim is 75% of one’s regular salary – This may accumulate quite quickly and might account for 2 to 3 million if you were never able to work again.