How to select a Wait Period for Income Protection
Income and Mortgage Protection can be one of the more complex risk products, one of the more misunderstood factors is selecting a wait period.
The 'wait period' is the amount of time from when you are unable to work and receiving your first monthly payment. The most common wait periods are four, eight and thirteen weeks. You are able to customize your policy by selecting a waiting periods to suit your personal circumstances, the longer you the wait period the lower the monthly premium.
When selecting a wait period that suits you, there are some important factors to consider:
- How much sick leave, holiday leave do you have before need the monthly benefit to start
- Do you have any savings? How long could you live off your savings?
- Are you willing to sell an asset to fund the wait period.
- Do you have a redraw available facility on your mortgage? How long could live off the money available?
Much like the choosing an excess on car insurance the more risk you are willing to take, or self insure, the cheaper the premium. In the case of income and mortgage protection you are deciding how long to wait before you are benefit. Some insurance providers pay monthly in-arrears so that means you will have to wait another four weeks after you wait period has finished before you receive the full monthly benefit. The details of each policy may differ from provider to provider which is why it is important to compare.
For more information talk to one of our advisers, we can help take the hassle the out of selecting a wait period that suits you.