During a recently available financial review with a new client, something I carry out with all new clients, I asked the question as to whether he’d any income protection in place. I was quite surprised and impressed when he explained he had. It’s not usually the first thing young people consider and this guy in his late twenties had it sorted…or so I thought. He quickly followed this with “I think I have that with my mortgage protection “.Ah ha. It wasn’t initially I had heard this and I’m sure it won’t function as the last. Indeed perhaps we as Financial Advisors and whoever sold him the initial policy are to blame. And so I attempt my task for today to educate the overall population or at the least anyone reading this on the difference between Income Protection and Serious illness.
Income protection is generally a standalone policy. It’s not usually linked to your mortgage though it can be used as a payment protection policy in some cases. Serious illness cover or critical illness cover as it also knows may be either standalone or incorporated in to a life policy or mortgage protection policy. That is where the confusion above often arises. Schwere Krankheiten Versicherung This client particularly had taken out a mortgage protection policy some years ago through the financial institution where he got his mortgage and during the time he was also offered serious illness cover being an option. This sort of policy can be a lot cheaper if you are younger and so he opted to go with this for a comparatively low premium.
Serious illness cover will shell out a lump sum on diagnosis of among a set of serious/ critical illnesses. Each company has their particular list and they differ slightly so you should check always that you will be getting the best cover. The main illnesses that they would all cover could be cancer, coronary arrest and stroke but many list around 40 roughly different conditions. In the case of a state the insurance company would shell out a lump sum payment. You can use this to clear some funds off your mortgage, clear loans, fund necessary treatment you may require and for general living expenses if you cannot benefit an amount of time. Generally this cover is great if you want money quickly to clear a loan or your mortgage or if the illness is short-term and you are able to come back to work soon after but if you’re unable to work ever again the lump sum is typically not planning to last very long.
Income protection on another hand provides you with a regular income in the event of you being underemployed for a lengthy period of time. It’d cover any illness or injury which leaves you unable to work. Yes any illness or injury including those covered by serious illness cover. It can pay you right as much as retirement or until you come back to work. In some cases your employer may pay sick buy confirmed period although there’s no obligation in law. Seriously worth taking into consideration is Income Protection insurance. Cover kicks in once you’re underemployed for more compared to specified period which is often 8 weeks, 13 weeks, 26 weeks or 52 weeks. The longer waiting periods are well suited for anybody who might be taken care of 6-12 months by their employer. You can have the income protection coincide with this so that it would kick in then ensuring no gap in your income. The maximum amount you are able to claim is 75% of one’s regular salary – This may mount up quite quickly and could potentially account fully for 2 to 3 million if you’re never able to work again.