Income Protection Insurance – Claim Exclusion & Excess Periods – confused?

If you like me are one of the many millions of people who’ve recently rushed out and bought some unemployment insurance in the form of Income Protection Insurance, you may be confused about the all important claiming part of the policy.

This centres around the Claim Exclusion Period and the Claim Excess Period.

So here’s an explanation of the difference:

Claim Exclusion Period.
Nearly all policies have a wording which excludes claims for unemployment for 120 days or four months from the inception date when you took out the policy. This period is to prevent fraudulent claims from people who knew they were going to be made unemployed. The exclusion period means the period of time that you will need to be unemployed or disabled before you qualify for claim payments. The qualification period options vary by policy are always detailed on the income protection insurance policy documentation.

Claim Excess Period
Not to be confused with the exclusion period, the excess period is a period
of time from the day you make your claim until the claim is eligible to be paid
out. It varies considerably by income protection policy and longer excess periods
generally mean cheaper premiums. This may not always be in your best interests,
so many of the independent income protection insurance suppliers now offer polices
which have ‘back-to-day-one cover’.

But what exactly is ‘back-to-day-one cover’? It means that claims are paid back
to the very first day of your claim for benefit.

For example,if you take out cover and then made a claim on the 1st of May you
would wait until the 31st of May before receiving any benefit but the payment
would be for the entire period you are unemployed or disabled from the 1st of
May. So effectively you get benefit as soon as you are eligible for a claim
and there is no ‘excess period’ in which you can’t claim benefit.

Shop around – Income Protection Insurance is one type of insurance where it really does pay to follow the maxim ‘shop around‘.

With so many offerings and variances in benefits and premium
rates, on the market it can get confusing, however the better Internet sites
now make the process quick and easy and should not deter you from purchasing
this modern essential

More information on UK Income Protection Insurance can be found here.

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