INCOME COVERS
Nine Suppliers - Multiple Options
Of all of the insurance benefits you can select, Income protection benefits come with the most complications, can be the most conflicting of products and are the hardest of the benefits to get right.
Essentially, income covers are supposed to pay to the life assured (or the benefit owner), a selected sum assured (of up to 75% of income, some say whichever is the lesser and for proof some look at the best 12 months income over last 3 years) and pay this benefit (normally weekly or monthly, some in advance, some in arrears) after the selected wait period (2/4/8/13/26/52/104 weeks or equivalent days) for a period on claim for your selected payment term (1/2/5 years, to age 65/70 or until death) or until you go back to work again. However it is not always as easy as this (see, you have probably already run out of wind and your eyes hurt and have glazed over!).
There are a myriad of choices;
- Some have offsets against the benefit - such as ACC benefit if you have an accident or ongoing income such as sick pay, ongoing income from your business, other income covers etc.
- Some suit employed clients but don't suit the self-employed.
- Some benefits are taxable, others are not.
- Some premiums are tax deductible, some are not.
- Some will pay a partial benefit if you go back to work part-time, some will not.
- Some pay in arrears, some pay in advance.
- Some will pay more than 75% of income if certain options are added.
- Some will pay less than the sum assured if a benefit is received form another source due to the same event (i.e. ACC).
- There are a selection of wait periods and a selection of payment terms.
- There are fire and general contracts, indemnity contracts, Loss of earnings contracts, agreed value contracts.
- Some need proof of income at claim time others need proof of income at application time, others do not require proof of income at anytime.
- Some will pay a maximum of 75% of income, others 55% of income, others a specified amount.
- As income changes so does your entitlement and in some case you may be paying a premium for a benefit you won't receive!!
- Income covers should be reviewed every two to three years as things change; we earn more, we earn less, we change jobs, we become self-employed, we become employed. All of these changes can result in you having Income insurance which may have been acceptable at inception but due to changed circumstances is now not correct and maybe unclaimable.
- Etc etc etc.
As you can the computation of choices are nearly endless. There are new style contracts that are far better for the self-employed than older contracts.
We believe that clients should know what they have and also know what they don't have and any pit falls that may apply at claim time.
Income contracts can be a very expensive benefit to add to your insurance arsenal, but there are ways to make the premium acceptable and the benefit applicable to your situation. We want you to get what you pay for!
Please tell me more about Income Cover
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