| When you are choosing a policy
then you need to try and marry up three factors as successfully as possible- your
needs, your budget and the policy itself.
First of all it is a good idea to add up all your essential living expenses,
this will give you a good idea of the amount of income protection cover you will
require. Different companies offer different levels of cover, with benefits ranging
enormously from firm to firm, so this will be a prime consideration when you are
seeking out an insurance provider. If you have a high salary then you might have
difficulty in finding an insurer willing to pay out the benefits that you need.
Use your required cover as a filter by which to sort potential insurance providers.
You also need to decide whether you want to be covered for accident
and sickness, or unemployment,
or both. It will obviously be cheaper to opt for single cover, but here your first
consideration should be the cover you need, not how much money you can save. If
you think that you require a combined policy covering you for both unemployment
and accident and sickness then it might be worth the extra expense for the security
of more extensive cover.
Decide how long you would need your benefits to be payable for, in the event
of a claim. Typically, insurers will pay out benefits for a period of 12 months,
but it is also possible to opt for a period of 24 months, although this will increase
your premiums. It is obviously difficult to predict your requirements in a situation
that has not yet occurred but try to think about your preferences in this area.
Find out how your insurer calculates their benefits before you purchase a policy.
Benefits that accrue daily are usually the best deal for the consumer as you receive
fair and level benefits for the precise amount of time that you are out of work.
Ask your insurance provider about this before you commit yourself to anything.
You will also need to think about how long you could wait living without a
wage before you received help. The industry calls this the deferred
or deferment period. Consider your financial situation and how much money
you might have tucked away in savings. There is a deferment period with every
income protection insurance policy, usually a minimum of 30 days, but you have
the option when you first purchase your insurance of specifying your preferred
deferment period. The longer your deferred period, the lower your insurance costs
will be. Balance your priorities and go for a deferment period that suits both
your long-term and short-term needs.
These are the main areas that you need to consider when purchasing your income
protection insurance. However, it is also worth bearing in mind that every insurance
company offers different packages and options for the consumer. Many UK insurers
allow you premium options, and you will be able to choose between guaranteed
and reviewable premiums. Guaranteed premiums may cost a little bit more at
the outset but will not be subject to unforeseen price rises, like reviewable
premiums. It is also possible to opt for index-linked
benefits which will ensure that the benefits you receive will rise level with
inflation, making sure that you don't get left behind by the economic climate.
Other plans are also available such as flexible income protection, where you are
allowed the freedom to adapt your cover as your lifestyle changes, or short-term
plans which pay out faster but are only available for a limited period of time.
You will familiarise yourself with the various plans available to you by shopping
around and becoming your own expert in the field. If all this has given you a
headache, then just take a deep breath and relax! All you need to do is know your
own needs, don't worry, there is bound to be a UK policy out there to suit both
your requirements and the reality of your situation.
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