What is Income Protection Benefit?
How do I select which features best meet my needs?
When will the benefit pay out?
How we assess your claim
How long the claim is paid
How benefits are paid
Premium payments when claiming (Waiver Of Premium)
Other income which is likely to reduce your benefit
What is not covered by Income Protection Benefit?
What is Income Protection Benefit?
It is a benefit that is designed to replace a chosen level of income if you’re incapacitated as a result of illness or injury.
You select the features to make sure that the cover is right for you. You decide:
- the amount of benefit you require,
- how soon the benefit should start, and
- how long the cover should last.
We provide cover until the end of the term, no matter how many claims you make.
We pay you a monthly income for as long as the claim is valid.
BACK TO TOP
How do I select which features best meet my needs?
The amount of benefit which can be paid
You choose how much benefit you’ll need.
Remember that tax and national insurance are deducted from your normal earnings but not from the benefit we pay you. This means that you should not need benefit which is more than your net earnings.
The maximum amount we will pay out is the monthly equivalent of two-thirds of your pre-incapacity earnings. However, if you’re not employed or self-employed at the start of incapacity, the maximum monthly amount we will pay out is £1,000.
See the ‘Other income which is likely to reduce your benefit’ section.
The earnings on which to base your cover
When choosing your cover, remember that if you claim, we’ll pay benefit based on your pre-incapacity earnings in the 12 months immediately before your period of incapacity.
If you’re employed, these are your pre-tax earnings for PAYE assessment purposes, excluding benefits in kind.
If you’re self-employed, these are your share of pre-tax profit from your trade, profession or vocation after deduction of trading expenses.
We will ask you for evidence of your earnings.
Income from savings and investments is not taken into account.
Automatic increases to your benefit payments
Your benefit will automatically increase each year in line with the Retail Prices Index. See the ‘Will I be able to increase my cover in the future’ section.
When benefit payments start
There will be a period at the start of your incapacity for which we do not pay benefit. This is known as the deferred period. You can choose between 3, 6 and 12 months. The longer the deferred period, the cheaper your policy will be.
Your choice should allow for any earnings which you expect to continue after you stop working, such as sick pay, or how long you’re prepared to live on your savings.
How long the cover should last
You choose for the cover to end when you think that you would no longer need the benefits. This can be up to your 65th birthday but should be no later than your planned retirement date.
There is a minimum 5 year cover period and you must be under age 60 when you start your plan.
BACK TO TOP
When will the benefit pay out?
The deadline for claiming
Tell us as soon as possible but no later than 8 weeks from when you’re first incapacitated. Otherwise there may be a delay in paying benefits.
When we pay out
When you are diagnosed as being incapacitated for a continuous period longer than the deferred period.
The extent of incapacity
Our usual definition of incapacity is any illness or injury as a result of which you’re unable to follow your own occupation and you’re not following any other occupation. If you’re not in an occupation at the start of your illness or injury we will measure incapacity by your inability to perform any three of the activities of daily living without the assistance of another person or the use of special devices or equipment.
The activities of daily living are:
- washing or bathing so as to maintain personal hygiene;
- putting on and taking off all necessary items of clothing;
- moving from one room to another or getting in or out of bed or a chair;
- getting food or drink into the body once it has been prepared and made available;
- getting on and off the toilet and maintaining personal hygiene following the use of it;
- controlling bowel or bladder function.
BACK TO TOP
How we assess your claim
If you’re employed or self-employed at the time of your claim, we’ll look at the duties of your occupation and your ability to do them. You will qualify for benefit if you’re unable to perform the essential duties of your occupation, resulting in a loss of earnings, and you’re not doing any other work. We will ask for evidence of your loss of earnings.
If you’re not employed or self-employed at the time of your claim we’ll assess your ability to perform the activities of daily living.
We will ask for evidence of the date that your incapacity started.
We will not be able to accept your claim if you do not provide us with medical or other evidence we ask for.
BACK TO TOP
How long the claim is paid
The benefit will be paid until the first of these events:
- you recover and are no longer incapacitated,
- your cover for this benefit ends,
- you die.
Claiming again after returning to work
There is no limit to the number of claims you can make. You must restart premium payments when your claim ends so your cover is maintained.
If you need to claim again for the same cause within 3 months of returning to work then the deferred period will not apply.
Returning to part time or less well paid work
In addition to the money you earn we may pay you a reduced benefit, which takes account of your lost earnings.
We will pay reduced benefit whilst you are medically unable to fully resume the duties of your occupation and can demonstrate a reduction in earnings compared to your pre-incapacity earnings.
See the ‘Other income which is likely to reduce your benefit’ section.
BACK TO TOP
How benefits are paid
Benefits are payable on premium due dates from the end of the deferred period.
BACK TO TOP
Premium payments when claiming (Waiver Of Premium)
You should continue to pay premiums until we accept your claim. However, we’ll pay your monthly premiums after you have been incapacitated for six months.
We will continue to pay your monthly premiums until the first of these events:
- you recover and are no longer incapacitated,
- your cover for this benefit ends,
- you die.
BACK TO TOP
Other income which is likely to reduce your benefit
We will reduce the benefit we pay if any of the following take you over the maximum benefit allowed:
- continuing payments from your occupation - such as sick pay or self-employment,
pension payments - unless you were entitled to them while still working,
- other income protection benefits - if they arise because of your incapacity and either result in regular payments to you or make regular payments on your behalf - such as mortgage payments,
- state benefits payable by the Department of Work and Pensions as a result of your incapacity.
If your benefit is reduced we do not refund any of your premium payments to us.
BACK TO TOP
What is not covered by Income Protection Benefit?
We will not pay out if you die. Your plan will end and no premium refund will be paid.
We will not pay out if the cause of the claim results from alcohol or drug abuse, criminal acts, flying on a non-commercial basis, hazardous sports and pastimes, HIV/AIDS, living abroad (defined as outside of Australia, Canada, the European Union, New Zealand, Switzerland or the USA for more than 13 consecutive weeks in any 12 months), self-inflicted injury, unreasonable failure to follow medical advice, or war and civil commotion.
BACK TO TOP