Chapter 6- Income Protection Flashcards
How long do standard IP policies usually last?
Until SPA but often until 70 nowadays
How long is the usual benefit period on limited term cover?
1-5 years
What type of IP is designed mostly for those self-employed?
Day one or Back to Day One
What are the 3 most common incapacity definitions?
Own occupation - Unable to perform own occupation
Suited Occupation - Unable to follow any occupation one is suited to
Any Occupation - Unable to follow any occupation
What is the usual IP deferred period?
13 or 26 weeks
Some 4 weeks
Some 52-104 weeks
What is Rehabilitation benefit?
A smaller benefit if return to work but earning less eg working part time but will earn full pay
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
Is personal IP benefit taxed?
No
Generally, do insurers need to be notified in a change of occupation?
No
How do Reviewable premiums work?
Reviewed in light of insurers claims experience
When should insurer be notified of illness?
Straight away
How is the deferred period treated in linked periods of illness?
Waived
What are the 5 key considerations when recommending an IP policy?
Deferred period Incapacity definition Benefit level Indexation or increases Guaranteed or reviewable premiums
What is a group IP policy’s tax treatment?
Taxed as income in the hands of the employee.
Subject to NICs.
Tax relief for employer as a deductible business expense.
