Through a income protection plan you can get payment monthly when you are out of work due to particular reasons. It is also a preferred type of insurance over others as it covers a major percentage of your income. However before you get the first monthly amount you have to wait for a specific number of days called the waiting period. The waiting period is mandatory for every policy but you can decide on the number of days you can wait. There is a catch here too; insurance companies offering cheap policies will not allow people working in blue collared jobs to wait for more than specific number of days.
To avoid this trap try comparing income protection policies and get to know the nuances of income protection plans of different companies and their types. When you fill the income insurance application form you can decide on the number of days you want to wait. Some insurance companies allow you to wait from two weeks to up to two years, other companies will allow waiting period of 2 months to 6 months. The usual waiting period offered by insurance firms in Australia is 14, 30, 60 and 90 days, however exceptions are made for some cases depending on the different requirements. This depends on the terms and conditions applied by the insurance company and can vary between companies.
The waiting period is also referred to as the cooling off period as during this time you cannot enjoy of the insurance benefits. Secondly the waiting period is applicable only till you receive the first payment once you make the claim. Subsequently the payment will reach month after month till the term decided by your policy.
If you are in hurry in the sense that you do not have any other income or savings to fall back on and your lifestyle and the lifestyle of your dependants will get affected severely without your income, you will want to get your first payment as soon as possible once you file the claim. If so you should choose a company that will provide you with customizable policies. Try incomeprotectiondirect.com.au, we deal with a number of insurance companies that would be more than happy to provide you with the tailor-made policy.
Remember that the waiting period influences the cost of the policy directly meaning longer waiting period implies lower premiums and shorter waiting periods will up the premium level considerably. Before you decide on the waiting period you need to consider factors like paid leave (sick leave, annual leave), other sources of income, liquid assets you have that can help in times of emergency etc. You also need to consider your expenses against the income and liquid assets for instance the money you are getting from these other sources, can they help you clear the mortgages and loan on time and if so how many days can you wait till you run out of these finances. You should choose such that the payment starts coming in at least 1 or 2 months before you run out of money so you never feel the financial burden after all that is the objective of taking out an income protection insurance policy