When choosing an income protection policy, consider the following key factors:
- Coverage level: Ensure the policy covers a sufficient percentage of your income, typically upto 60-65%. Should you not require the full cover, perhaps due to a high disposable income, you could choose a lower cover value to reduce the cost of the premiums
- Definition of disability: Understand how the policy defines disability and under what conditions benefits are paid.
- Deferral period: Check the waiting period before benefits begin, ranging from 14 days to several months.
- Benefit period: Determine how long the policy pays benefits, which could be a few years or until retirement.
- Premium type: Choose between guaranteed premiums (fixed) and reviewable premiums (can increase over time).