Income protection benefit

Introduction

Income Protection Benefit Plan (IPB) is designed to pay a monthly benefit if your client is unable to work due to incapacity caused by illness or injury, resulting in loss of earnings.

Underwriting Criteria

  • The benefit is paid until your client is no longer incapacitated, the plan ends or death occurs (whichever is earlier)
  • The policy may terminate at any age between 50 and 70 inclusive
  • Minimum term for the policy is 5 years (if over 45 when the policy starts)
  • The age of your client at policy inception must be between 18.5 and 60 next birthday
  • There are four deferred periods to chose from: 4, 13, 26 and 52 weeks
  • The minimum premium allowable is £6 per month or £60 per annum
  • The contract can be set up with two levels of monthly benefits and two deferred periods. Although the 4 week deferred period can only be used once
  • The product is financially underwritten at Claim stage
  • Premiums are waived whilst an IPB benefit is being paid.

Standard Policy Exclusions

There is only one standard policy exclusion:

  • Alcohol or solvent abuse, or taking of drugs except under the direction of a registered medical practitioner.

Part time workers

  • Part time workers who work less than 16 hours per week and housepersons can have a maximum benefit of £1,667 per month (up to £20,000 per annum)
  • If your client works less than 16 hours per week, they will be given a housepersons (HO1) occupation class.

Definition of disability

Definition of disability
Occupation Class Definition of Disability
 1     Own occupation throughout the policy term 
 2
 3
 4
  Houseperson / Part-time Workers (Clients working less than 16 hours per week) / Unemployed  Activities of Daily Living (ADL)

For full wordings of the definitions of disability, see PDF file: Income Protection Benefit (IPB) - Policy Summary (QGI12845) PDF size: 1.6MB .

Foreign Residency/Travel

  • The policy shall remain in force if your client resides in or travels to any part of the European Union, United States of America (USA), Canada, Australia, New Zealand, the Isle of Man or the Channel Islands after the policy has been issued
  • The benefit will be paid for up to 6 months if your client is residing or travelling outside of the above countries.


We would not normally offer IPB to anyone who is residing abroad at the outset of the policy.

Premium Reduction for Mental Illness and / or Spine Exclusion 

  • With effect from 18 May 2014, we have introduced a premium reduction when a mental illness and / or spine exclusion is applied to an Income Protection Benefit plan. This reflects the resulting reduction in risk
  • The reduction in premiums will be up to 10% (the exact reduction depends on the exclusion(s) applied)
  • Any reduction will be implemented via a manual process
  • Any reduction will be picked up during the underwriting process, and a new offer letter will be sent to your client confirming the reason for the reduction in premium
  • Pipeline cases where a mental illness and  / or spine exclusion has already been applied will not be reviewed However, the premium reduction will be applied on such cases if requested
  • The premium reduction can't be applied to existing policies.

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