Income covers are a must for those people who want to ensure the financial safety of their families and dependants. Income covers are considered to be an essential part of the personal insurance plans offered to permanent Australian residents and for good reasons. Insurers pay large amounts of money towards claims every year and these amounts help families in Australia survive income loss when they are forced to take leave from work due to illness or injury.
Facts about the Waiting Period of Income Insurance Plans
- The waiting period is the number of days or weeks, the policy holder cannot file a claim. The waiting period starts as soon as the application is processed by the insurer. The application is processed only after the policy holder has purchased the policy. During this waiting period, the policy holder is left unprotected by the insurer. In case of emergencies the policy holder will have to fend for himself.
- Although the standard number of days insurers require policy holders to wait before filing the first claim is 30 – 60 days, some policies usually the cheaper ones offer longer waiting periods that can range from 90 days – 120 days. The details of the cooling off period along with the benefit period and term of the plan will be mentioned clearly on the insurer’s website and will also be mentioned on the product disclosure statement. It should be noted that people with some pre-existing health conditions may be asked to opt for either longer waiting periods or exclusions. Alternately premium loading fees may be an option for high risk buyers.
- The waiting period of income protection plans can be adjusted to suit the policy holder’s needs provided that he purchases a plan that offers this facility. Choosing a shorter waiting period can increase the cost of your policy by a few dollars. There are two reasons why all policies have cooling off periods; the first is lower premiums and the second is the policy holder gets time to rethink his decision if this facility is offered by the insurer.
- Choosing a longer waiting period has its benefits however; policy holders must not take this decision lightly especially if they have dependants. The policy holder should not only take his personal circumstances into consideration but should also consider his health status and financial status before deciding how many days he is ready to wait.
- The day one claim benefit is offered by many insurers in Australia. This benefit usually costs extra because it is an important benefit. The day one claim benefit ensures that in case of injury or illness, the policy holder can file a claim before the waiting period is over. In most cases, the selected insurer will accept the day one claim in a few days however; the compensation payment will be provided once the cooling off period is over.
How Does the Waiting Period affect me?
- Choosing a longer waiting period implies that you have to survive without getting financial help from the insurer if you fall ill or are injured during the cooling off period. This means that, you will have to either dip into your savings or liquidate your assets. Alternately you may be forced to take short term loans at high interest rates.
- Choosing a lengthy waiting period may be troublesome for your family as well especially if you have young children or elderly parents who have expensive needs. Hence, before deciding if you want to wait for 2 weeks or 2 years to be able to file the first compensation claim, you should consult a financial advisor and also go over your bills so that you know where you stand financially.
The Real Cost and Value of Income Covers
- Cheap plans that are offered online can be purchased for as less as $7-$10 where as flexible plans can cost a few more dollars. The rates mentioned here are on a per month basis. Buyers may be able to save money on premiums if they pay premiums every year in advance. Buyers may also be able to save money on premiums if they purchase plans online from reputed insurance agents who allow buyers to compare plans and get good deals or make use of promotional discounts.
- While cheaper plans appear to be cost effective at first, exclusions and limitations are part of these plans hence as time passes, buyers may notice that cheap plans are not as effective as they had believed them to be. Flexible plans on the other hand have lesser limitations and offer many more benefits hence they tend to pay for themselves in the long run. Flexible or premium plans also give buyers the choice between indemnity and agreed value contracts. The benefit period of flexible plans may also be longer, the waiting period may be shorter and additional perks may be provided.
- It is not necessary that the most expensive plan available to buyers is the best one for you. Your personal and financial circumstances will decide how much cover you need, the ideal number of days for waiting, the benefit period and other features of the plan. If you are in doubt regarding the ideal plan for you then you should consider, either talking to a financial advisor who can inform you of the various implications of purchasing selected plans or you should talk to an insurance advisor who can inform you of the various benefits and downsides of purchasing selected income insurance plans.