31 Aug Income Protection Or Critical Illness?
Income Protection Or Critical Illness?
Income protection or critical illness
What's the difference between the two?
It is critical to understand the differences between the various types of insurance. Some may be wondering if they should get income protection or critical illness. While critical illness insurance will pay out a lump sum if diagnosed with a covered illness. Income protection insurance will provide you with a steady stream of cash until you die, retire, or are able to return to work, no matter how long it takes.
Only policy-defined “critical illnesses” pay out. Reading the fine print is vital to knowing which illnesses your policy covers because the specifics of each policy vary. It may be necessary to determine that you have a severe case of one of the diseases before you are eligible for a pay-out.
However, there are critical illness (1) upgrades that you can apply to your policy. These pay out for less severe cases of specific diseases that are in the fine print.
Income Protection -
Most medical conditions that are serious enough to prevent someone from working, including stress or back problems.
Can You Claim More Than Once?
Critical Illness -
No. In the event of a claim, the policy will only pay out the full benefit as a lump sum. But, family income benefit policies can pay the sum as a steady stream of cash rather than a one-time pay-out.
Income Protection -
Yes. You can file as many claims as you need to during the policy’s duration.
How Is A Pay-Out Calculated?
If you file a valid claim during the policy period, you may receive the full amount of your insurance coverage. This would be the amount you chose when taking out your policy.
When you file a claim for income protection, you won’t receive your full salary but rather a percentage of your average salary. Most often, this is between 50% and 70%. The actual percentage paid out varies between providers.
What are the pros?
The coverage amount is up to you and is not related to your income. The pay-out upon a successful claim may be large enough to settle a mortgage, a large loan, and other large expenses.
If you’re self-employed/run your own business or you don’t have access to sick pay benefits through your employer, this is a great option. It’s very cost effective because it has the potential to pay off for a long time.
Income protection or critical illness?
Both policies’ main goal is to keep you and your loved ones afloat financially in the event that you become unable to work for an extended period of time.
Critical illness and income protection insurance are vital for protecting your family financially. Ideally, you’d have both, but that might be too expensive.
If you’re unsure which cover would benefit you more. Click here to fill out a short form and one of our experts will get back to you to discuss your options and recommend the best type of coverage.