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It will pay out in the event that the insured
is unable to work as a result of either illness or accident. It
pays out in the form of a regular income, in effect to replace
the salary payments that the insured had become used to.
Payment is made if the it is the opinion
of the provider that the insured cannot undertake work, however
in many instances here is a deferred period - either 4,13,26 or
52 weeks. During the deferred period no benefit will be paid and
therefore premiums tend to be cheaper in relation to the length
of the deferred period.
In most cases the benefit ceases should
the insured return to work although, it is possible to obtain
a continued benefit if the insured is forced to seek a lower paid
job as a result of the disability.
In the majority of cases, under current
legislation, the payments are made free of tax and are not deemed
taxable income.
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