What's the difference between indemnity value and agreed value insurance?

With an agreed value policy, you are required to verify your income when applying for income protection and your income is agreed to at the start of your policy. This means you will know what you will receive regardless of your income at the time of claim. Generally clients who are self-employed or are concerned about income fluctuation (e.g. maternity leave) will consider an agreed contract. This option is not as cost effective as an indemnity style policy but it provides you with more certainty of your benefit amount if you need to make a claim.

An indemnity style policy means that you are insured for what you say you earn at the time you complete an application. You are then required to verify your income at the time of claim. If your income has reduced since you applied for cover, your claim may be paid on the reduced amount. Generally clients who are not self-employed or concerned about income fluctuation will consider an indemnity policy. Usually, when indemnity policy benefit payments are assessed at the time of claim, the insurer will consider your earnings from 12-24 months prior to you lodging a claim.