About Income Protection

 

Income protection or Income replacement policies as they are often called are intended to provide you with monthly sum of money while you are unable to work due to accident or sickness. Income Protection policies will continue to pay out until your chosen retirement age. Policies that pay for a shorter period are called Accident & Sickness policies which can provide unemployment if required.

OWN OCCUPATION POLICIES WITH A CLAIMS RECORD OF NEARLY 96% ACCEPTANCE

If you use our request a quote service this will give you a premium from a Friendly Society (not a general insurer) because this policy will give a maximum of 65% of your gross salary.This amount will vary from insurer to insurer ranging from 50% to a maximum of 65% of gross salary.

There are a number of reasons why Income protection insurance has a bad reputation in the media. So many of these policies are sold as additions to loans or mortgages by banks & building societies under the name of premium protection. Plus the ambiguity of so many of the terms from insurers and wording in the policy documents which you only discover in the small print when you try to claim.

For example: Often you can have a policy for 20 years termed "Own Occupation" Suited Occupation" or Any Occupation". The policy wording can say payment is if you are unable to carry out your normal occupation. The small print then says after one or two years the policy reverts to any suited occupation. I.E. If after this time they decide ok you can't do your own job but there are lots of other jobs you could do they will stop paying.

Then of course there are the payments by work task definition. I.E. There are 8 or 10 tasks, For example being able to use a pen, hear, see, carry a one kilo weight a certain distance etc. etc. You have to not be able to perform maybe three of these before they will pay a claim. In my 40 plus years experience in this business I have seen clients diagnosed with Cancer, given only a limited life expectancy and they can easily perform all 10 tasks.

More and more we are finding clients like to consider the Friendly Societies who are not for profit organizations. Their policies remain "Own Occupation" and they have a claims acceptance rate of over 96% but do not support guaranteed premiums.

Deferment period means the time you must be unable to work before they will begin paying benefits. Most companies will pay employees for a period of time if they are off sick, insurance companies will not pay while your employers are also paying you, so there is no advantage to be gained by paying for a deferment period of less than the period of time your employers will pay you for. Deferment periods can vary from one day to 52 weeks.

In all cases when you return to work the policy stops paying and you have to go through the same deferment period for a second or third claim.

You cannot insure yourself to cover your full earnings. In general the maximum is between 50% and 65% of your average gross earnings. However since the payment is tax free it is in reality much closer to your net pay.