During a recent financial review with a fresh client, something I carry out with new clients, I asked the question as to whether he had any income protection in place. I was quite surprised and impressed when he told me he had. It’s not usually the very first thing teenagers think about 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 the very first time I had heard this and I’m sure it won’t be the last. Indeed perhaps we as Financial Advisors and whoever sold him the original policy are to blame. And so I set about my task for today to educate the typical population or at least anyone looking over this on the difference between Income Protection and Serious illness.
Income protection is generally speaking a standalone policy. It’s not usually associated with your mortgage although it may be used as a payment protection policy in a few cases. Serious illness cover or critical illness cover as additionally it is know can be either standalone or incorporated right into a life policy or mortgage protection policy. That is where in actuality the confusion above often arises. This client particularly had removed a mortgage protection policy some years ago through the lender where he got his mortgage and during the time he was also offered serious illness cover being an option. This type of policy can also be a whole lot cheaper when you are younger and so he opted to go with this specific for a relatively low premium.
Serious illness cover will spend a lump sum on diagnosis of certainly one of a list of serious/ critical illnesses. Each company has their very own list and they differ slightly so you need to check that you will be getting the very best cover. The key illnesses that they’d all cover will be cancer, coronary arrest and stroke but most list around 40 approximately different conditions. Schwere Krankheiten Versicherung In case of a claim the insurance company would spend a lump sum payment. You could utilize this to clear some funds off your mortgage, clear loans, fund necessary treatment you could require and for general living expenses if you cannot work for an amount of time. Generally speaking this cover is very good if you need money quickly to clear a loan or your mortgage or if the illness is just short-term and you can come back to work soon after but when you had been struggling to work again the lump sum may not be planning to last very long.
Income protection on another hand offers you a typical income in case of you being out of work for an extended period of time. It’d cover any illness or injury which leaves you struggling 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. Sometimes your employer may pay sick purchase a given period although there’s no obligation in law. Seriously worthwhile considering is Income Protection insurance. Cover kicks in once you’re out of work for more compared to specified period which can be 8 weeks, 13 weeks, 26 weeks or 52 weeks. The longer waiting periods are suitable for anybody who may be paid for 6-12 months by their employer. You can have the income protection coincide with this specific such 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 can accumulate quite quickly and may potentially account for 2 to 3 million if you had been never in a position to work again.