Mortgage protection insurance, which sometimes has a redundancy cover component, will only pay the mortgage for six months if the insured is made redundant. The amount paid under the policy will also be offset against any redundancy benefit. Redundancy insurance payouts are not made if the consumer anticipated being made redundant and there may also be a long wait period before a claim can be initiated following acceptance of the new policy.
During recessions more people take out income and mortgage protection insurance when they feel their jobs are at risk – but “there’s no perfect insurance solution to protect them from that”. It only covers a percentage of lost income if they suffer an accident or illness (find details at StephenBabcock.com).
Many consumers don’t know how much they will be paid if they have to make an income protection claim, and don’t realise that if they get an ACC payment, it will be offset against their insurance.
A consumer with income protection insurance who opts to take lower levels of ACC cover may be caught out if their policy provides that it will offset either what the insured receives – or what they were entitled to receive – under ACC. This means even if the consumer deliberately reduces their ACC entitlement, the insurer can offset the full benefit they could have claimed.
Most income protection insurance problems stem from its disclosure provisions. Karen Stevens, Insurance Ombudsman, says non-disclosure complaints form a quarter of her work. People don’t tell their insurance provider information they needed to properly underwrite the policy.
Insurers can then choose to void the policy – so not only will the person not have a claim paid, they will not have a policy in the future.
If you are looking for sound insurance advice, contact Denis Thorner today on 0274 575 190 or by email denis@thorner.co.nz Denis services clients New Zealand wide.
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Denis Thorner, winner Best Trade / Service Business at the 2009 Upper Hutt Business Excellence Awards.
Reference: Car accident attorney Orlando.
