An Income Protection policy is the most comprehensive form of illness cover that is available but as with any form of insurance, you need to be aware of the fine print. Without advice, it is possible to take a policy with the following pitfalls.
- A policy that doesn’t pay out because it has the wrong definition of disability
- Payments that reduce by 50% after 1 year of pay-out and 75% after 2 years
- A policy that stops paying out after 1 year as the disability definition changes
- The insurer pays out less than you are covered for at claim
- Payment refused as the claim was caused by an event excluded in the fine print
- Index-linked cover premiums increasing much more than the extra cover
- Payment refused as your job title does not match your work activities
One of the major benefits of taking financial advice when taking out an Income Protection policy is that if the policy has been set up incorrectly by your adviser, you have the right of complaint and possible compensation and the monthly premium will be exactly the same as if you apply yourself.
If you take a policy without advice and it doesn’t pay out, that’s your problem.
We say, speak to an IP expert and get some FREE advice.
(A significant number of IP companies only offer policies through advisers as they recognise these risks)