Chapter 6 - Income Protection Insurance Flashcards
What is back to day one cover?
Each day of work is covered after being off work for a specific number of days
Most income protection policies automatically include what
Waiver of premium
The highest level of cover provided by an income protection policy is one, where incapacity is defined as
Own occupation
Rachel took out an income protection policy for years ago when she was a marketing consultant. She now makes a claim on the policy when she is unemployed. Typically, what will her insurer do
Treat her as being unemployed, and either decline the claim or restrict the claim to the level of any benefit guarantee amount
I claim on an income protection policy will typically be excluded where it arises from
Failure to follow medical advice
How long after residing in another country will an existing UK income protection policy be cancelled
One year
What happens if an individual claims under an income protection policy because they cannot do that old job, but then takes a lower paid work instead
They may receive a proportion, its benefit, which, in effect, makes up the loss of earnings involved in the rehabilitation of insured
Which IP incapacity definition gives the widest cover?
Own occupation
What are the occupation classes for IP?
Class one which is professional workers
Class two witches light, skilled manual workers
Class three what is skilled workers in manual jobs?
Class for skilled workers in hazardous jobs
When is IP benefit paid free of tax?
Under the pay as you earn (P A, Y,E) and so is liable to the employer as a business expense
When might a claimant pay tax on the benefit from an IP policy?
When the payment is from a group policy that is paid via the employer
A client make the claim under his individual income protection policy, what is subsequently able to return to Kevin . What effect will this have on the benefits and cover provided under the policy?
Payment of the claim will cease, will it cover under the policy will continue as before without need for any further underwriting or medical questionnaire
Two. Business partners, each require an individual income protection insurance policy. What is the position with regard to tax relief on the premiums?
There’s no tax relief available
What is the tax advantage to employee in affecting an income protection insurance policy on an individual basis, rather than being covered by employers group scheme?
The benefits in payment are tax-free
Is income protection based of gross or net pay
Income protection is based of gross pay, not net
