What is it?
Income protection policies pay you (the insured) a pre-agreed regular sum in the event that you are unable to work due to accident or illness.
There is usually a ‘deferred period’ of 3 or 6 months during which no payment is made. Once the deferred period has passed, the insurance company pays the agreed sum to you until you get better, reach the expiry age under the policy or die.
The amount you can be insured for is usually limited to a maximum of 75% of your pre-illness income.
How Can It Help Me?
In a country where there are no social security benefits for expatriates the impact of not earning an income due to long term illness can have a severe impact on your finances. Additionally, it can ruin your longer-term plans.
When Would I Use It?
Most people use this type of insurance to meet their cost of living, to pay every day bills and put food on the table.
What Else Should I know?
The type of work you do will have a significant impact on your premiums. Office workers pay less than those working on construction sites for example.
There are at least 3 categories of employment: own occupation, any suitable occupation and any occupation. Most plans start on the basis of ‘own occupation’ which is the narrowest definition and therefore the most likely to result in payment from the insurance company. Consequently, this is the most expensive type of cover.
To control costs, some insurers offer own occupation for a given period of time followed by any suitable occupation thereafter. Suitable occupations may be those which you have trained to do or have the qualifications to do, but you were not doing immediately prior to the onset of illness or accident.
Due to the importance of occupation for this type of cover it is essential you inform the insurer if you change your occupation.
What Should I Do Next?
Please contact us for more information on rates and providers.