Let’s face it, applying for income protection - or any form of insurance - is unlikely to be the highlight of your week, and we all want the process to be over as quickly as possible. Many direct insurers offer this simplicity, with policies such as those advertised with ‘on-the-spot’cover, no questions asked. The appeal of speedy coverage is obvious, but policies such as these do come with limitations, and it is important to weigh up your options before settling on a policy that is right for you.
When comparing direct income protection to a fully-medically underwritten policy, the prize for ease goes to direct insurance, as no health information needs to be provided and immediate approval is often available. But, what is the cost of this simplicity?
These direct income protection policies often do not cover any pre-existing conditions that the insured has experienced over the five years prior to policy commencement. This includes ailments for which the insured sought medical treatment, and those which a reasonable person should have been aware of, regardless of whether treatment was sought, or the condition medically diagnosed.
Fully-medically underwritten polices may also exclude major pre-existing conditions, but they do provide transparency over which conditions are covered - no nasty surprises come claim-time. In addition, minor conditions suffered in the previous 5 years that could be excluded under a direct policy, such as Virgin Income Protection, are often covered. At Rate Detective we have 1000s of examples where minor aliments from our clients have been covered at standard rates.
For an individual with no recent medical problems, direct income protection may be suitable, but it is important to read the ‘Product Disclosure Statement’ as there are often other physical characteristics that, if apparent in the five years prior to policy commencement, are also deemed to be ‘pre-existing conditions’. These include high Body Mass Index, blood pressure, and cholesterol, and can affect pay-out in the cases of stroke, hemorrhage, or heart-related problems.
It is important to also read the fine print regarding employment conditions as many direct insurers exclude certain professions and employment situations. For example, some direct income protection policies excludes cover for those on the police force, fire fighters, and those who work at heights greater than 20m, among many others.
Another important factor is your policy’s waiting period - the period of time you must be out of work before you can receive a payout. While most companies offer a 14 day waiting period, a direct insurer’s income protection policy may have a standard waiting period of 28 days, but longer periods are available for decreased premiums. With a full-time employee normally accruing just 20 sick days per calendar year, think to yourself - how long can myself and my family survive without my income?
Following on from this question, many insurers also offer polices that pay-out in the case of involuntary unemployment - usually a monthly benefit for up to three months while you look for work. For those who are self-employed cover is also available, however, it is very important to look closely into your policy as many will only cover complete business insolvency, not simple downturns in the market, and will not pay-out if bankruptcy occurs during the first 6 months of the policy.
Remember, not all policies are equal, take the time to investigate your options, or give us a call here at Rate Detective to find the best option for you. At Rate Detective we compare offers from 12 different insurance companies. All the companies on our panel perform medical assessments prior to application, thus ensuring that you do not pay more than necessary for your life insurance.
At Rate Detective our consultants are always available to help you find an affordable life insurance policy. Don’t put it off any longer, pick up the phone and have a chat with us today.