Tag Archives: Income protection insurance

Income Protection Insurance

Income Protection Insurance & COVID-19

What you need to know.

Since the onset of the coronavirus (COVID-19) pandemic, more people have become aware of the importance income protection insurance can offer, as it can provide the financial support needed if you’re unable to work due to illness or an accident.  For many its the right time to review the income protection cover you have in place – or to seek expert advice if you don’t yet have any.

While it’s certainly still possible to get income protection insurance, some insurers have adjusted their application processes and introduced new questions around COVID-19. Insurers will want to know if you have the virus or are experiencing symptoms of it. They may also want to know if you’ve recently been in contact with someone who has the virus or have been advised to self-isolate. 

Income protection insurance policies are unlikely to cover people self-isolating as they probably won’t be off work longer than the waiting period and may not be too ill to work.  Insurers will pay out under the terms of their contracts, but you should be clear on the terms of their coverage.  S

elf-isolation is unlikely to be covered for income protection policyholders unless you have experienced loss of income if you are out of work because you are ill. For claims to be paid, you will be required to meet the definition of incapacity. Policies will vary and it is important to check with your professional financial adviser.

Self-isolation which is not medically advised is unlikely to be covered unless symptoms are severe and continue beyond the waiting period. You can still put in place income protection insurance. Insurers are trying to make decisions to support new clients as quickly and as fairly as possible.

In some cases, insurers may have to request medical evidence from a GP, consultant or an independent medical examiner before offering cover. With these cases, there could be a delay to the decision as some insurers have temporarily postponed new applications where medical evidence is needed to avoid putting further strain on the NHS.

Where appropriate, insurers are continuing to explore alternative approaches to these complex cases to avoid unnecessary delays to new applications. You can still claim on an income protection insurance policy if you’ve been furloughed. But it’s definitely worth checking your specific insurance policy wording, or contacting your professional financial adviser, because insurers are taking different approaches.

Insurers are also exploring other ways to accept applications that require medical evidence in this new environment.

To find out more about income protection cover, or if you need independent financial advice on any other topic, please get in touch with our Farnham-based Fish Saltus team – we’d be more than happy to help!

Critical illness cover 2021

A helping hand for you and your loved ones.

If you were diagnosed with critical illness, would you be able to cope financially?

It’s all too easy to think “I’d cope” or “That’ll never happen to me”… but most of us know someone either directly or through friends and family that has been affected.

As we’ve seen from the coronavirus (COVID-19) pandemic any of us can become ill at any age. Critical Illness cover can help to minimise the financial impact on you and your loved ones. For example, if you needed to give up work to recover or if you passed away during the length of the policy, the money could be used to help fund the mortgage or rent, everyday bills or even simple things like the weekly food shop – giving you and/or your family some peace of mind when you need it most.

Surviving financial hardship
After surviving a critical illness, you may not be able to return to work straight away (or ever), or may need home modifications or private therapeutic care. It is sad to contemplate a situation where someone survives a serious illness but fails to survive the ensuing financial hardship. Preparing for the worst is not something we want to think about when feeling fit and healthy, but you never know what life is going to throw at you next. 

Tax-free lump sum
Critical illness cover, either on its own or as part of a life assurance policy is designed to pay you a tax-free lump sum on the diagnosis of certain specified life-threatening or debilitating (but not necessarily fatal) conditions, such as a heart attack, stroke, certain types/stages
of cancer and multiple sclerosis.

Comprehensive policy
A more comprehensive policy will cover many more serious conditions, including loss of sight, permanent loss of hearing and a total and permanent disability that stops you from working. Some policies also provide cover against the loss of limbs. But not all conditions are necessarily covered, which is why you should always obtain professional financial advice.

Much-needed financial support
If you are single with no dependants, critical illness cover can be used to pay off your mortgage, which means that you would have fewer bills or a lump sum to use if you became very unwell. And if you are part of a couple, it can provide much-needed financial support at a time of emotional stress.

Exclusions and limitations
The illnesses covered are specified in the policy along with any exclusions and limitations, which may differ between insurers. Critical illness policies usually only pay out once, so are not a replacement for income. Some policies offer combined life and critical illness cover. These pay out if you are diagnosed with a critical illness, or you die, whichever happens first.

Pre-existing conditions
If you already have an existing critical illness policy, you might find that by replacing a policy you would lose some of the benefits if you have developed any illnesses since you took out the first policy. It is important to seek professional financial advice before considering replacing or switching your policy, as pre-existing conditions may not be covered under a new policy.

Lifestyle changes
Some policies allow you to increase your cover, particularly after lifestyle changes such as marriage, moving home or having children. If you cannot increase the cover under your existing policy, you could consider taking out a new policy just to ‘top up’ your existing cover.

Defined conditions
A policy will provide cover only for conditions defined in the policy document. For a condition to be covered, your condition must meet the policy definition exactly. This can mean that some conditions, such as some forms of cancer, won’t be covered if deemed insufficiently severe. Similarly, some conditions may not be covered if you suffer from them after reaching a certain age, for example, many policies will not cover Alzheimer’s disease if diagnosed after the age of 60.

Survival period
Very few policies will pay out as soon as you receive diagnosis of any of the conditions listed in the policy and most pay out only after a ‘survival period’, which means that if you die within this period even if you meet the definition of the critical illness given in the policy, the cover would not pay out.

Range of factors
How much you pay for critical illness cover will depend on a range of factors including what sort of policy you have chosen, your age, the amount you want the policy to pay out and whether or not you smoke.

Permanent, total disability is usually included in the policy. Some insurers define ‘permanent total disability’ as being unable to work as you normally would as a result of sickness, while others see it as being unable to independently perform three or more ‘Activities of Daily Living’ as a result of sickness or accident.

Activities of daily living include:
• Bathing
• Dressing and undressing
• Eating
• Transferring from bed to chair and back again

Make sure you’re fully covered
The good news is that medical advances mean more people than ever are surviving conditions that might have killed earlier generations. Critical illness cover can provide cash to allow you to pursue a less stressful lifestyle while you recover from illness, or you can use it for any other purpose. Don’t leave it to chance – make sure you’re fully covered.

To find out more about critical illness cover or income protection, or if you need independent financial advice on any other topic, please get in touch with our Farnham-based Fish Saltus team – we’d be more than happy to help!

Critical illness cover-COVID

Income Protection Insurance

No one likes to think that something bad will happen to them.

Being unable to work can quickly turn our world upside down, as we’ve seen for thousands of people during the coronavirus (COVID-19) pandemic crisis. No one likes to think that something bad will happen to them, but if you couldn’t work due to a serious illness, how would you manage financially?

Could you survive on savings or sick pay from work? If not, you may need some other way to keep paying the bills – and you might want to consider income protection insurance.

You might think this may not happen to you and of course we hope it doesn’t, but it’s important to recognise that no one is immune to the risk of illness and accidents.No-one can guarantee that they will not be the victim of an unfortunate accident or be diagnosed with a serious illness. The bills won’t stop arriving or the mortgage payments from being deducted from your bank account, so going without income protection insurance could be tempting fate.

Providing monthly payments
Income protection insurance is a long-term insurance policy that provides a monthly payment if you can’t work because you’re ill or injured, and typically pays out until you can start working again, or until you retire, die or the end of the policy term – whichever is sooner.

Keep your finances healthy as you recover from illness or injury:
• Replaces part of your income if you become ill or disabled
• It pays out until you can start working again, or until you retire, die or the end of the policy term – whichever is sooner
• There’s a waiting period before the payments start, so you generally set payments to start after your sick pay ends, or after any other insurance stops covering you. The longer you wait, the lower the monthly payments
• It covers most illnesses that leave you unable to work, either in the short or long term (depending on the type of policy and its definition of incapacity)
• You can claim as many times as you need to, while the policy is in force

Generous sickness benefits
Some people receive generous sickness benefits through their workplace and these can extend right up until the date upon which they had intended to retire. However, some employees with long-term health problems could, on the other hand, find themselves having to rely on the state, which is likely to prove hard.

Tax-free monthly income
Without a regular income, you may find it a struggle financially, even if you were ill for only a short period, and you could end up using your savings to pay the bills. In the event that you suffered from a serious illness, medical condition or accident, you could even find that you are never able to return to work. Few of us could cope financially if we were off work for more than six to nine months. Income protection insurance provides a tax-free monthly income for as long as required, up to retirement age, should you be unable to work due to long-term sickness or injury.

Profiting from misfortune
Income protection insurance aims to put you back to the position you were in before you were unable to work. It does not allow you to make a profit out of your misfortune. So the maximum amount of income you can replace through insurance is broadly the after-tax earnings you have lost, less an adjustment for state benefits you can claim. This is typically translated into a percentage of your salary before-tax, but the actual amount will depend on the company that provides your cover.

Self-employment
If you are self-employed, then no work is also likely to mean no income. However, depending on what you do, you may have income coming in from earlier work, even if you are ill for several months. The self-employed can take out individual policies rather than business ones, but you need to ascertain on what basis the insurer will pay out. A typical basis for payment is your pre-tax share of the gross profit, after deduction of trading expenses, in the 12 months immediately prior to the date of your incapacity. Some policies operate an average over the last three years, as they understand that self-employed people often have a fluctuating income.

Cost of cover
The cost of your cover will depend on your gender, occupation, age, state of health and whether or not you smoke. The ‘occupation class’ is used by insurers to decide whether a policyholder is able to return to work. If a policy will pay out only if a policyholder is unable to work in ‘any occupation’, it might not pay benefits for long – or indeed at all. The most comprehensive definitions are ‘Own Occupation’ or ‘Suited Occupation’. ‘Own Occupation’ means you can make a claim if you are unable to perform your own job; however, being covered under ‘Any Occupation’ means that you have to be unable to perform any job, with equivalent earnings to the job you were doing before not taken into account.

You can also usually choose for your cover to remain the same (level cover) or increase in line with inflation (inflation-linked cover):
• Level cover – with this cover, if you made a claim the monthly income would be fixed at the start of your
plan and does not change in the future. You should remember that this means, if inflation eventually starts to rise, that the buying power of your monthly income payments may be reduced over time.
• Inflation-linked cover – with this cover, if you made a claim the monthly income would go up in line with the Retail Prices Index (RPI).

When you take out cover, you usually have the choice of:
• Guaranteed premiums – the premiums remain the same all the way throughout the term of your plan. If you have chosen inflation-linked cover, your premiums and cover will automatically go up each year in line with RPI.
• Reviewable premiums – this means the premiums you pay can increase or decrease in the future. The premiums will not typically increase or decrease for the first five years of your plan but they may do so at any time after that. If your premiums do go up, or down, they will not change again for the next 12 months.

Making a claim
How long you have to wait after making a claim will depend on the waiting period. You can typically choose from between 1, 2, 3, 6, 12 or 24 months. The longer the waiting period you choose, the lower the premium for your cover will be, but you’ll have to wait longer after you become unable to work before the payments from the policy are paid to you. Premiums must be paid for the entire term of the plan, including the waiting period.

Innovative new products
Depending on your circumstances, it is possible that the payments from the plan may affect any state benefits due to you. This will depend on your individual situation and what state benefits you are claiming or intending to claim. This market is subject to constant change in terms of the innovative new products that are being launched. If you are unsure whether any state benefits you are receiving will be affected, you should seek professional financial advice.

To find out more about income protection, or if you need independent financial advice on any other topic, please get in touch with our Farnham-based Fish Saltus team – we’d be more than happy to help!

Over 50s job security concerns

Your future self

Over-50s concerned about job security due to COVID-19 pressures.

The coronavirus (COVID-19) pandemic crisis could leave the next generation of retirees significantly poorer and sicker. 4.8 million people over 50 and in work fear losing their job because of the COVID-19 pandemic, according to new research that reveals fears of finding a new role[1].

One in three (31%) are concerned about finding new employment in the event of losing their job ahead of the end of furlough. Two out of five (41%) people over 50 and in work say they are worried about their job security.

Significant money worries
Amidst career uncertainty, this group also faces significant money worries, with 58% concerned about the impact of the pandemic on their long-term savings. The Government’s furlough scheme is set to end on 31 March 2021.

A large number of over-50s are now facing financial worries as a direct result of COVID-19. Over a third (37%) of over-50s have seen their household income decrease during the pandemic, as companies furlough staff while cutting back on wages and head counts.

Meeting everyday living costs
For workers who have seen their income drop, large numbers have turned to their reserves to counter this, with nearly a quarter (25%) having dipped into their savings to help meet everyday living costs.

Over two-thirds (68%) are concerned about their cost of living currently, with a third (35%) reducing their daily expenditure as a result. With incomes impacted, well over half (58%) are also worried about how the pandemic will impact their savings long term.

Source data:
[1] Opinium Research ran a series of online interviews among a nationally representative panel of 2,004 over-50s from 30 July to 5 August 2020. Calculation: 1,076 out of 2,004 UK adults on a separate nationally representative survey counted themselves as aged 50 and over. 1,076 / 2,002 * 52,673,000 = 28,281,511. On the survey of 2,004 over-50s, 343 said they were currently working and were concerned about job security. 343 / 2004 * 28,281,511 = 4.8 million

Are you concerned about your job? To find out more about income protection, or if you need independent financial advice on any other topic, please get in touch with our Farnham-based Fish Saltus team – we’d be more than happy to help!

Income Protection Insurance

Financial support

 

Looking after your lifestyle during a time of uncertainty

Nobody wants to worry about how they’ll pay the bills if they become sick or injured and can’t work. But illness or injury can strike at any time and can lead to serious financial trouble. The latest government figures[1] report the dramatic increase in the likelihood of long-term sickness absence when we age, leading to an employment absence of four weeks or more.

Read more…

Income Insurance

Income protection insurance

Cover for you and your family finances

It’s important to be able to keep your finances healthy as you recover from an illness or injury. Being unable to work can quickly turn your world upside down. No one likes to think that something bad will happen to them, but if you couldn’t work due to a serious illness, how would you manage financially? Could you survive on savings or sick pay from work? If not, you may need some other way to keep paying the bills – and you might want to consider income protection insurance.Read more…