Income Protection

What is it
Income protection insurance provides you with a regular income in the event that you are unable to work due to illness or injury.

What is the difference between an income protection plan and an accident and sickness policy?
An income protection plan has no restriction on the number of claims or the length of the claim period other than to your selected retirement age (see “how long will the benefit be paid to me?”). The plan can only be cancelled if you cease paying premiums.

Do not confuse these plans. An accident & sickness policy will only pay benefits for a maximum period of 12 months or in some cases 24 months. It is normally an annually renewable contract and can be cancelled at renewal by the insurer. This means that if you are making too many claims because of poor health you run the risk of not being able to renew the policy and then being left without cover when you most need it. Worst still, you may not be able to obtain cover elsewhere.

Why do I need it?
In the event of you being unable to work, how will you generate any income? Imagine the implications if you could not provide sufficient income to pay your mortgage or rent and household bills, which includes food for yourself and your family.

The likelihood of incapacity is rising.  Department for Work and Pension figures show that over the past fifteen years the number of people claiming State Benefit for ill health has doubled to over 2 million.

It is illogical that many people insure
household appliances for breakdown but not themselves!

Won’t the state provide benefits for me?
You could receive as little as £60 per week for short-term incapacity depending on whether you are employed or self-employed.

The amount of Incapacity Benefit you receive if you suffer long-term illness or disability depends on how long you are off work and whether you are employed or self-employed. It takes into account your age, and the number of dependants.

Assuming you are eligible, you could receive as little as £4,082.00 a year, after 52 weeks off sick, as a single person on Incapacity Benefit. With a spouse you will receive £6,523.40 a year. What's more, the payments for a claimant and spouse would be taxable.

Amount of benefit (from April 2006). Source: Department of Work and Pensions

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How much benefit can I receive?
This varies between insurance providers but the maximum is generally 50%-65% of your taxable earnings and is paid tax-free based on current tax rules (2007).

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What illnesses and injuries are covered?
Although there are standard exclusions on most insurers contracts such as self-inflicted harm, drug and alcohol abuse etc. cover is provided against all illnesses and injuries unless specifically advised to you before the plan commences.

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How will the insurer decide on policy exclusions?
The insurance application form asks a number of questions about your medical history and the insurer may also request and pay your GP for a medical history report. If there are any existing or previous medical conditions, which are considered to increase the risk of claims, the insurer will advise if any exclusions are to be applied to the cover.

It is therefore important that all relevant information is disclosed in order to avoid future claims being declined.

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When will my benefit start?
You decide on how long you could manage financially, if you are unfit to work, before the benefit starts and this will depend on your own financial circumstances. You may need the benefit to start immediately or you might perhaps be able to manage for a period of 1 or 2 months (this is known as the deferred period). The longer the deferred period, the lower the cost of cover will be to you.

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How long will the benefit be paid to me?
This may vary with some insurance contracts but generally the benefit will continue to be paid to you until you are fit enough to return to work but no longer than your selected retirement age, which can be any age between 50 and 65 years old.

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How much will the cover cost me?
The cost very much depends on the nature of your job, your age and medical history together with the level of benefit and length of deferred period chosen.   See the cost indicator for a guide to the cost of cover.

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MANUAL WORKERS AND BUILDING TRADESMEN

Most insurance providers are either very expensive or restrict the terms of cover for manual workers and tradesmen. However, Chase Templeton Ltd has access to specialist plans for this sector of the workplace and can advise you on the most appropriate policy for you.

SPORTS INJURIES

Most policies will provide cover for injuries sustained whilst playing non-hazardous sports, which includes football and rugby as long as these are not played in a professional or semi-professional capacity. An income protection plan will normally provide far more attractive benefits than the usual accident and sickness plan offered by most sports clubs for their team members.