@synapseza recently shared this top tip on taking out income protection.
I have an Income Protection/Disability Protection/Life Cover/Let’s-add-some-more-complicated-benefit-enhancements-and-accelerators-to-charge-even-higher-premiums product with Discovery. The Income Protection is by far the most expensive benefit of the product.
Looking through the policy document I noticed that there is a choice between waiting periods. Of course my broker didn’t mention it when I signed up. I was on the shortest waiting period of seven days. I have an emergency fund, so I really have no need to be covered for such short periods. Extending the waiting period to 30 days resulted in a 30% premium reduction. They didn’t quote for 90 days although this is an option in their product. It’s definitely something to check out and align with your emergency fund.
Why we love it
Insurance is the only product we ever buy hoping never to use – the ultimate grudge purchase. The pain of insurance premiums is often compounded by the knowledge that the company selling us the policy are trying (and succeeding) to fleece us. We know at the outset that the person selling us an insurance policy is literally incentivised to sell us as much as they can for personal gain. The whole thing is gross.
Infuriating though that knowledge may be, knowing how the industry works means we know better than to accept the first offer. Going through your insurance documents with a fine-tooth comb puts you in a position of discovering the sometimes massive (30%!) wriggle room. When you’re going through the process of getting an insurance product, don’t be afraid to ask how different waiting periods and co-payments will affect your monthly premium. If that salesperson is going to take your money, make them sweat for it.
As we become more financially stable, we can afford to let the income replacement products and short-term insurance go. If sticking it to the insurance industry is not enough incentive to achieve financial independence, nothing is.
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