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Choosing the Right Waiting Period for Income Protection Plans

Income protection plans allow buyers in Australia to get maximum compensation payments in a timely manner when they cannot go to work due to genuine problems such as illness or disability. These plans ensure that the policy holder gets the first compensation payment after he has waited for a set number of days or weeks. This terms used to define this period is known as “waiting” or “cooling off” period.

In most cases, policy holders can choose how long they wish to wait to get the first compensation payment. Buyers can choose a waiting period as short as 2 weeks or as long as 6 months, provided they opt for a flexible plan. Some insurers set restrictions on how long buyers can wait to get the first compensation payment, such as a minimum or maximum wait period, where as other insurers do not set restrictions.

The main benefit of opting for a shorter cooling off period is that the buyer gets to enjoy compensation payments and other perks as soon as possible, shortly after he files a successful claim. A longer waiting period means that the buyer may have to wait for several weeks or months before he can make use of the benefits offered. A shorter waiting period often implies higher premiums and a longer waiting period usually implies cheaper premiums.

While selecting a waiting period, buyers should remember that they can enjoy the benefits offered only after the waiting period is over; hence they should consider various factors such as paid leaves, financial obligations and other personal factors before deciding if they want to wait for a few weeks or several months.

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Income protection is a crucial part of any comprehensive financial plan. If you’d like some help customising the correct policy for you, or want to know more about the income protection insurance benefits.