FAQ - What is Income Protection ?

What is Income Protection Benefit Plan?
Also known as Permanent Health Insurance (PHI) it is a plan designed to give you a regular benefit if you suffer illness, injury or diablement leading to a loss of earnings. You select the features of the plan to make sure the cover is right for you

• You decide:
  
  • the amount of benefit you require - subject to the limits in the 'The amount of benefit that can be paid' section
  • how soon you need the benefit to start
  • for how long you want the benefit to be paid - see the 'How long the benefits can be paid' section
  • for how long you want the cover to last
  • if you want to add the option of Unemployment Cover (some companies will not offer this benefit).
• You pay regular premiums to keep the cover in force.
• The Life Insurance company provide cover until your policy ends no matter how many claims you make. You tell them when illness or injury has stopped you working or if you become unemployed (if available).
• The Life Insurance company will pay you a monthly income for as long as the claim is valid.

How do I select the plan's features so that it meets my needs?
This section deals with the choices you make when setting up your plan.

The amount of benefit that can be paid
You choose the amount of benefit you'll need.
Remember that tax and national insurance are deducted from your normal earnings, but not from the benefits the Life Insurance company pay you.
This means that you should not need benefit which is more than:

• 55% of your pre-incapacity earnings up to £50,000 per year and 35% of your pre-incapacity earnings over £50,000per year. This is approximately the maximum percentage of your earnings which most Life Insurance companies will pay out.
• If you are a 'houseperson' or work less than 16 hours per week, the maximum benefit is between £700 and £800 per month.

See also the section 'Other income which is likely to reduce your benefit'.

The earnings upon which to base your cover :
When choosing your cover, remember that if you claim, the Life Insurance company will pay benefit based on your pre-incapacity earnings:

• Normally if you are employed, these are your pre-tax earnings for PAYE assessment purposes (excluding benefits in kind) in the 12 months before you became unable to work.
• If you are self-employed, these are your share of pre-tax profit from your trade, profession or vocation after deduction of trading expenses, as described in Schedule D Case I and II of the Income and Corporation Taxes Act 1988 in the 12 months before you become unable to work.
• " If you have been self-employed for a short period of time (up to 36 months) please check the individual Life Insurance company definition for calculating your maximum benefits

The Life Insurance company will ask for evidence of your earnings at point of claim.

Income received from savings and investments is not usually taken into account.

Increasing your cover -Automatic increases to your benefit payments - (Index-linked)
At the start of your plan, you may choose for your benefit to increase each year in line with inflation at each plan anniversary. Your benefit will increase in line with the Retail Prices Index (RPI) with a maximum increase of typically 10% in anyone year. The premiums you pay will rise at the same rate. This option is only available if your application is accepted on normal rates. If you decline this option at any time, the Life Insurance company will not offer it to you again.

When benefit payments start
There will be a period when you are first unable to work for which the Life Insurance company will not pay benefit. This is known as the deferred period. You can choose between 4, 13, 26 and 52 weeks. The four week deferred period is only available for certain occupation classes. The longer the deferred period, the cheaper your policy will be. Be careful as your benefit payments will start one month after the end of the deferred period and will then be paid monthly in arrears.

Your choice of deferred period should allow for any earnings which you expect to continue after you stop working, such as sick pay, or how long you are prepared to live on your savings.

How long the benefits can be paid
For incapacity cover, your benefit will be paid until the first of these events occurs:

- you are no longer incapacitated
- you are no longer suffering a loss of earnings
- the policy ends

How long the cover should last
You choose for your plan to end when you think you would no longer need the benefits, but the plan should end no later than your planned retirement date.

Medical and other details the Life Insurance company may need
Your application will include questions about your medical history, earnings, occupation and other personal circumstances. The Life Insurance company may request additional medical evidence to support your application at their expense.

You must tell the Life Insurance company about any pre-existing medical conditions. If you do not, it may affect your claim.

Further details about the cover and any limitation is in the Policy Conditions section of the Policy Document which is made up of the Policy Schedule and the OLA (Ordinary Life Assurance) Wrap. We provide more information about cover and limits in the Technical Guide which is available via the on-line quotation facility at www.GoForCustomer.co.uk The Life Insurance company may apply exclusions when they accept your policy, such as excluding certain conditions and pre-existing medical conditions. If this is the case these will be shown in your acceptance and policy schedule.

How flexible is it?
This section deals with choices you can make once your plan has started.

Regular review of cover
You should consider how your earnings and living costs have changed since you last reviewed your cover.

If you wish to increase your cover by more than any automatic options provided by your plan (if chosen at outset), please use the on-line quotation facility at www.GoForCustomer.co.uk

Any increase in cover, will be subject to a fresh assessment of your health, earnings, occupation and other personal circumstances. If accepted, your premium payments to the Life Insurance company will increase.

Suspending your cover

Life Insurance companies do not suspend cover but offer continuous cover during a career or maternity break. See the 'What other features are there?' section.

Change of occupation

For incapacity cover you do need to tell the insurance company if you change your occupation after the plan starts. In most cases this will not affect the premium.

You also need to tell the Life Insurance company of a change of occupation if you have selected the unemployment option (if available). You may not be able to claim if you have changed your occupation or employment status.

When will the plan pay out?

When to claim
When you are unable to work because of illness or injury resulting in a loss of earnings.

The deadline for claiming
Tell the Life Insurance company as soon as possible, but no later than four weeks from when you are first incapacitated as this may delay or reduce your payment.

How do I make a claim?

If you need to make a claim contact info@GoForCustomer.co.uk or your insurance company direct. Details are with the policy documentation.

We will send you a claim form to complete and return to us. The Life Insurance company will then consider your claim. They may ask you to provide certificates or other evidence as required.