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Agreed & indemnity value contracts

Agreed Value

Agreed Value contracts are considered to be the best types of income protection insurance policies since these contracts ensure that members receive a fixed compensation payment every 30 days after they file a claim and after the waiting period is over.

These contracts usually cost a little extra compared to indemnity contracts mainly because the former, ensure that the policy holder’s income while filing the claim doesn’t affect his claim amount especially if his income has reduced significantly since he applied for leave before filing the claim. All claimants who opt for agreed value contracts get a pre decide amount towards compensation after their claim application has been accepted.  Buyers who opt for this contract have to submit certain papers such as financial documents at the time of purchasing the contract.

Indemnity contracts

Indemnity contracts on the other hand are cheaper since they have restrictions that include limited compensation that is decided by the insurer when the policy holder files the claim. Policy holders who opt for indemnity contracts have to submit financial papers and documents at the time of filing the claim since the insurer will review the policy holder’s financial records at that time and decide how much compensation payment he gets.

This implies that if the policy holder receives 25% lesser at the time of filing the claim compared to how much he earned at the time of purchasing the contract, then the policy holder may receive 25% reduced compensation payments. Other factors such as the insured amount and the premiums paid may also influence the insurer’s decision on how much to pay the policy holder.

 


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