Answered by Andrew Jenkinson
Short term vs. long term protection explained
One of the major flaws with accident and sickness insurance is that these plans can only payout for a maximum of 12 consecutive months (although with some plans 24 months of cover can be obtained).
Do payments stop after 12 months?
Yes, this means that if a more serious condition is suffered that requires more that 12 months off work there would be no protection past this point. In other words, the plan would simply cease making payments even if you were still too ill or injured to work.
Do I need more than 12 months cover?
Although 12 months of protection may provide enough cover for a very acute condition, such as broken leg, it can be nowhere near enough time to recover from something more serious, if a full recovery is even possible at all.
One insurer, Ageas Protect, report from their pricing data (released in 2011) that between the ages of 30 and 65, 1 in 7 people are off work for 6 months or more. 1 in 3 of those will still be off work 5 years later. These figures clearly highlight the need for longer term protection.
Are there any long-term alternatives?
Yes, income protection insurance can cover earnings until retirement if you are unable to return to work due to illness or injury.
Essentially, with an income protection policy (sometimes known as permanent health insurance) the plan continues to payout either until you are well enough to return to work or you reach the end of the policy term, which is commonly set at age around 65.
Frequently Asked Income Protection Insurance Questions
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