Income Protection

If you are unable to work due to illness or injury, you will be entitled to a claim on your Income Protection policy. You will have to prove that you are unable to work (via your doctor) and prove your income. You will also be required to wait out your previously agreed deferred period once you have claimed on your policy.

The benefit pay-out term can be short-term or until a selected age. For example, if you intend to retire at the age of 70, you can have a pay-out term to match. In the case of short-term Income Protection, you can have a benefit payment period of one, two or five years. You will be covered until your selected retirement age and can claim multiple times; however, the claim will be paid for either one, two or five years.

The waiting or deferred period is how long you can wait before you can benefit from a claim. The general rule of thumb is, the shorter the waiting period, the more expensive the policy will be.

It could be, depending on your situation, that taking out the maximum amount of cover (50-60% of your gross annual income) is a good idea. However, it is important to note that this will increase the cost of your monthly premiums. If you are worried about the cost, the best solution is to cover your essential expenditure as a starting point. This will also ensure that you are not over- or under-insured. It is important to always keep in mind that you also need to save for retirement if you cannot work.

You can also index your cover to keep it in line with inflation. This is highly recommended as it means that your cover will keep pace with inflation. We would only recommend level cover if you are sure that your income will not increase for the remainder of your career.

Own Occupation | This type of Income Protection plan pays out if illness or injury prevents you from working in your current job. Some other levels of cover will require you to get an alternative job that you are capable of working. Own Occupation cover does not require this and will pay out immediately.

Suited Occupation | This type of Income Protection provides a lesser degree of protection compared to Own Occupation. An insurer may require you to seek a more suitable occupation that you are capable of working, should you be unable to work in your current job.

Any Occupation | With this type of cover, an insurer may not necessarily pay out immediately and may only pay out reduced earning protection. The insurer may, in some circumstances, ask you to undertake any other occupation for which you are capable.