When you are choosing income protection insurance the important thing to remember is that good policies have many opportunities to make a claim. It is the policy wording that determines when the income protection insurance will pay and how much the insurance will pay.
The main wording you should look for in your income protection insurance is:
What is the definition of both full and partial disability?
What is the definition of income that will be off set when you make a claim?
The definition of disability establishes if the income protection insurance will pay after your stand down period has passed. The stand down period is the length of time before the insurance starts paying. Just because you have not been working your normal number of hours it does not necessarily follow the insurance will make a full payment. The partial disability definition is important because it increases the chance of the insurance company making a payment where you are back at work but not able to earn the full income that you had before your disability
The definition of income that is offset determines how much the insurance company will pay when the claim is accepted. The insurance company can limit its risk by including income such as ACC, holiday pay or sick leave or any income that they determine you are receiving as a result of your personal exertion. They deduct the money you are being paid from the amount that they pay you.
The role of an insurance adviser like me is to help you understand what the policy wording means before you purchase income protection insurance as everyone’s circumstances are different. When I help you make a claim it is the experience that I have from having been through the claims process that ensures you get the best out of your income protection insurance.
