An agreed value policy as the name suggests is where your income is assessed when applying for Income Protection Insurance and you are then covered for a set amount. The advantage of this is that you know what you are covered for no matter what happens regarding changes to your level of income. The downside is the policies are more expensive.
An indemnity policy on the other hand is where you prove your income at the time of making a claim. If you income has decreased you will receive a smaller benefit.
The general concensus is for self-employed or people with varied income agreed value policies are a better option. There is a school of thought that when you can get it you should always utilise an agreed value policy to provide certainty.
As with all thing financial planning related we recommend you seek advice to ascertain what is best for you. If you would like further information please contact us.
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