Income Protection, Insurance Advice

Why Wait and Cover Periods Are Important

An image of a pedestrian sign that says “Wait” in lit orange letters.

When your insurance broker is advising you about your choice of income protection policy, always make sure that they go over the wait and cover periods with you. A wait period is referring to the exact amount of time that you will have to wait until you can start receiving the benefits in your income protection policy after you have made a successful claim.

What wait period should you select when taking out income protection insurance?

These wait periods are chosen by the client upon application time and can vary between 2 weeks right the way through to 2 years depending on your specific needs.

So, if a client makes a claim that is accepted by the insurer then as soon as the wait period is up the client will receive their monthly benefit.

Typically, with having a longer wait period the premiums are generally cheaper. But how do you know what length wait period you should choose. It is all a balancing act. The longer that your wait period is, the longer you will have to go without money when you get sick or injured so the more risk you have. The lesser wait period you have means less risk and higher premiums.

Selecting the right length of time essentially comes down to you as the client and your specific needs. We do recommend that you ask yourself a few questions before selecting the wait period.

Could you or your family survive on only one income or a lower income for this length of time?

Do you have bills and other debt that needs to be serviced during this time?

Would you be able to afford medical costs incurred? 

We can help you consider these options to ensure you make an informed decision.

What cover period should you choose when selecting your income protection policy?

The cover period is essentially how long you will receive your monthly benefit for after you make a claim. Benefit periods are usually set for two to five years but can also go up to a certain age, like 60 65 or even 70 years of age. 

Typically, with having a longer benefit period this means the premiums will be more expensive.

Selecting the right length of cover period comes down again to personal preference. We suggest asking yourself a few questions.

If I got sick or injured how long would I need an income to cover me for?

When do I plan to stop working?

Would my family survive if I had a reduced income for a period of time?

If you are older or closer to retirement age you might look at selecting a shorter wait period. This will cost less in premiums.

Make the right decision.

At Rethink, we can help you consider all of these options to help you make the right decision for your needs. Choosing the right insurance policy is a big step, and we’re here to take it with you. We’re the experts in everything from debt consolidation to trauma insurance, so you can be sure you’ll get the right advice.

Contact us now for your free consultation.

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