Short Term Income Protection cover pays out if you are unable to work due to illness or injury, however it will not pay out in the case of redundancy. The primary difference between an Income protection insurance policy and Critical Illness Insurance policy is the amount and frequency of pay out.
In an Income protection claim the pay out is periodic and generally a percentage of earnings usually 60% to 70% paid out on monthly basis and the said payment are exempt from tax, as compared to Critical Illness claim which makes a one-time lump sum pay out.
The pay out under Income Protection policy begins after the end of a pre agreed period know as a deferral period, the shorter the deferral period the higher the premiums, the usual deferral period is between 13 to 26 weeks. While seeking Income protection cover, it is essential to check with your employer the cover they have in place to support you as an employee for the time off work.
Critical Illness insurance pays out a lump sum when the policy holder is diagnosed with a particular critical illness, which is covered under the conditions of the policy. While Critical Illness Insurance is a standalone product, is it more often than not taken alongside a Life Insurance policy.
Life Insurance is a protection product which helps to provide financial security and cover to your dependents, family and loved one’s in the unfortunate event of death. The said money that is paid out as a claim from the policy, can be very useful to the dependents to continue the lifestyle they are used to. The funds received can replace a loss of income and could be used to pay off debts like Mortgages, which can reduce a huge financial burden.
The policy holder will have to pay a monthly premium for the duration of the policy term, the amount of premium to be paid is dependent on several factors like age, health and lifestyle.