Payment Period
A payment period is the maximum length of time your Income Protection or Mortgage Protection policy can continue paying benefits while you're unable to work due to illness or injury.
The payment period determines how long your insurance benefit can continue if you're unable to work and meet your policy's claim definition. Depending on the insurer and the policy you've chosen, payment periods can range from a fixed number of years, such as two or five years, through to age 65.
Choosing the right payment period is an important part of tailoring your cover. A longer payment period provides protection for an extended period if you're unable to return to work, but it will generally result in higher premiums. A shorter payment period is often more affordable, although you'll need to consider how you would manage financially if you remained unable to work after the benefit stopped.
Your payment period works alongside your wait period. The wait period is how long you must be off work before benefits begin, while the payment period is how long those benefits can continue once they start.
The best payment period depends on your age, financial commitments, savings and long-term goals. An adviser can help you choose an option that provides the right balance between affordability and financial security.
Why It Matters
If you're unable to work for an extended period, the length of your payment period can have a significant impact on your financial wellbeing. Choosing a payment period that suits your circumstances helps ensure you have support for as long as you may need it.
Common Misunderstandings
"The payment period is the same as the wait period."
No. The wait period is how long you wait before benefits begin, while the payment period is how long benefits can continue to be paid.
"Longer payment periods are always the best option."
Not necessarily. While they provide longer protection, they also usually come with higher premiums.
"My policy pays me forever."
No. Every policy has a maximum payment period, which is selected when your cover is established.
"I stop receiving payments as soon as I return to work."
Generally, yes. However, some policies include partial disability benefits that may continue to provide support if you return to work with a reduced income.
FAQs about Payment Period
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This depends on your financial commitments, budget and how long you would want protection if you couldn't return to work.
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Many insurers allow changes to your cover, although this may affect your premium and could require underwriting.
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Yes. Longer payment periods generally have higher premiums because the insurer may need to pay benefits for a longer time.
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The benefit amount is how much you receive each month, while the payment period is how long those payments can continue if you're eligible to claim.
Choosing the right payment period is an important part of making sure your Income or Mortgage Protection cover meets your long-term needs. If you're unsure which option is right for you, talk to a New Vision Financial Services adviser. We'll help you tailor your cover to suit your lifestyle, financial commitments and future goals.