March 5 Update – Trevor Thompson

I think I am about to get on my high horse again! Dodgy advice rears its head once more.

I might have explained the difference between agreed value and indemnity when it comes to Income protection insurance. If you have an indemnity policy you have to prove your income to the insurer at time of claim. If your actual income is less than you stated on your application, your claim is reduced.

In the case of a self employed person, if your business has a bad year and there is a loss then you have no income to insure. What will you get if you claim????????

So agreed value means the sum insured is guaranteed, right? WRONG. Its only guaranteed if you prove your income at time of application. An adviser can submit an application for agreed value and the insurance company will issue it but it isn’t worth much if the financials arent provided with the application to prove income.

Last two self employed clients who asked for a review had policies that said “agreed value” but when I rang the BIG BANK insurance company to check the first one, no financials, no guarantee and client was covered for zilch due to running his business at a loss. Second one would have been paid half what he thought he was insured for if he ever claimed.

If you buy Income Protection you need to be able to trust your adviser and know what you have bought!!

By Trevor Thompson. 
CFP DipFP

SENIOR PARTNER

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