6 - Income Protection Flashcards
How does IP pay? What does it pay for?
Weekly or monthly income unable to work because of longer term illness or incapacity
Can the insurer cancel on IP?
Nope as long as they keep paying premiums. The insured can keep claiming
What is IP classified as (insurance)
long-term
How long is the usual benefit period on limited term cover
1-5 years
What type of ip is designed mostly for self employed
Day one or back to day one
What are holloway policies
(a form of IP usually issued by friendly societies and often bought by the self-employed) build up a cash value at retiremen
What is the usual ip deferred period
13 or 26 weeks
What are the 3 most common incapacity definitions
Unable to perform own occupation
Unable to follow any occupation one is suited to
Unable to follow any occupation
What is rehabilitation benefit
A smaller benefit if return to work but earn less eg working part time
What is proportionate benefit
Similar to rehab benefit but if they take a different role than they had previously
What is the usual benefit limit for ip
50-60% average gross earnings
Increasable IP - how can this work
linking cover to an increase in the level of inflation as measured by the retail prices index (RPI), the consumer prices index (CPI) or a measure of earnings inflation; or
increasing cover by a pre-determined percentage each year.
Generally, do insurers need to be notified in a change of occupation.
No
Is personal ip benefit taxed
No
Waiver of Premium
If the policyholder suffers an illness or accident that prevents them from working, the insurance company waives premiums at the level they were at when the period of incapacity started, possibly with indexation. Some waiver contracts also cover unemployment:
What is the age IP normally ceases
SPA
What are the features looked at when underwriting for IP
Age
Deffered Period
Term
Smoking
Escalation options
What are the two types of hazards in IP
Physical Hazard - higher risk job - higher risk hobbies more risk physically
Moral Hazard - knowing you are insured so gonna be more risky
How do reviewable premiums work
Reviewed in light of insurers claims experience
Benefits of reviewable premiums
The use of reviewable premiums allows the insurer to offer lower premiums
Renewable premiums period
and also benefits - what does it entail for the insurer
As an alternative to conventional ‘permanent’ IP policies, renewable policies are available which are structured over a short term (e.g. five years) with guaranteed renewal at expiry.
The insured may renew the contract and the insurer cannot decline to continue to cover, but premiums will be revised at renewal in line with the insurer’s then current rates.
When is claim normally paid out IP
Return to work
End of policy
Death
Free limits - what are they
if insured travels to uk/republic of ireland - western countries (1st world) - generally pays IP up to 3-6 months but not more than a year
When should insurer be notified of illness
Straight away
