The insurance industry has become increasingly more complex over the past two decades. A perfect example of the changes that have occurred can be seen in the comparison of Income Protection with Sickness Accident Insurance.

Sickness & Accident Insurance provides up to 75% of your monthly gross income as a benefit if you are unable to work due to sickness or injury. It is usually offered by general insurance companies as an additional section of a business pack and is renewed each year similar to your car insurance.

However, if the Insurance Company decides that you are too great a risk to continue to insure they can elect to not offer you insurance from the next renewal date. Generally speaking, this will usually occur after at the time when you need cover the most, after you have made a claim.

Income Protection is identical to Sickness & Accident Insurance in the core benefits offered. Up to 75% or your gross monthly income is paid if you are unable to work due to illness or injury.

However, this is where the similarities end.

An Income protection policy is underwritten due a Life Insurance company. The Insurance company will review the health of an applicant, along with any dangerous past times, to determine if the cover can be offered. Once the policy has been underwritten and accepted the Insurer cannot cancel the cover, even if a claim is made or the circumstances of the client change, as long as the premium continues to be paid.

An income protection policy also carries some significant additional benefits, such as a lump same payment should a trauma event occur and short waiting periods for accidental injury (between 1 and 3 days compared to 30 days for a normal waiting period.

The obvious question then is why would you elect to take a Sickness & Accident Cover over an Income Protection Policy. In the past a Sickness & Accident Cover was considerably cheaper to purchase, easier to obtain (as there were no health related underwriting requirement) and Sickness & Accident could cover certain occupations that Income Protection would not cover.

Over the past five years the price gap between the two types of policy has disappeared for non-smokers and closed significantly for smokers. In addition to this many companies that offer Sickness & Accident Cover are beginning to heavily restrict the High Risk occupations covered and are also seeking more information on the medical health of there clients.

In today’s market place you are in a far better position if you can obtain Income Protection over a Sickness & Accident Cover for two main reasons. Firstly, the cover cannot be cancelled by the insurer (some conditions apply within the first 3 years) providing you with peace of mind and Secondly, the additional benefits that can be offered under Income protection.

For more information on either Income Protection or Sickness and Accident Cover cannot PIG and speak to one of our advisors.