INSURANCE By Steve Wright
The benefits of short payments Short benefit payment terms under Income or Mortgage Protection can be useful but do you know how they work?
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hort benefit payment periods (how long your income protection or mortgage protection cover will pay monthly benefits on disablement) can be very useful, especially for clients with very limited budgets. The cheaper premium that comes with a short benefit payment term on income protection and mortgage repayment insurance, such as 2 or 5 years, can be tempting and often necessary for
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clients with limited budgets who need short waiting periods but it is important that clients understand the downside. The downside is naturally that for those clients disabled (totally or partially disabled) forever or a very long period, their benefit payments may end before their disability ends. If you recommend insurance with a 2 year payment term and the client is disabled forever, 24 monthly benefit payments is the most the client will get, leaving clients
exposed to the financial risk associated with long term disability.
‘BUT DON’T BENEFIT TERMS RESET FOR EACH DISABILITY’! Good policies will reset short term benefit payment terms following a return to work after disability but clients have got to recover sufficiently to be back at work full time before that can happen (i.e. they
