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
The usual limitation on the amount of benefit that can be paid from an individual income protection policy is the total of all policies do not exceed what
50 to 60% of average monthly gross earnings in the year, prior to incapacity
If a client has income protection policy with a deferred period of 13 weeks, when should he notified insurance company in the event that he becomes incapacitated and needs to make a claim?
As soon as possible
 What’s the temperature in policy includes waiver of premium how long does the waiver of premium remain valid while making a claim?
Until that person returns to work, or the expiry of the policy or a specified age
Benefits from income protection policies would normally be paid weather. Insured is permanent residence within area is known as what
Free limits
What is the difference between benefits from an individual income protection policy and a group policy?
Benefits from an individual income protection policy are paid gross with no liability to income tax whereas group policies pay taxable and paid net
What is the maximum amount that someone on sabbatical could get in income protection?
£18,000 per year
What is typically, the maximum monthly benefit payable under an income protection policy
50 to 60% of the insured average monthly gross earnings in the year, prior to incapacity
