Income Protection Description

What is Income Protection (also known as PHI)?
It is a health insurance policy which remains in force for a set term and is designed to pay you a regular income (after a waiting period) if you become sick or disabled /during the term of the policy, until you return to work, the plan term ends or you die.

Its aims
To provide you with a replacement income if you become sick or disabled during the term of your policy.

Your commitment
You agree to pay a regular monthly or yearly premium for the life of the policy.

Risk factors
Your own circumstances may change, forcing you to stop paying premiums and therefore losing the benefit of your cover. The benefit payable is based on your income and, therefore, if your income reduces the benefit will reduce accordingly.

How soon will I start to receive my replacement income?
You can choose to receive an income after a waiting period of 4, 8, 13, 26 or 52 weeks from the date on which you first become sick or injured.

Why do I need a waiting period?
The waiting period is the period between becoming disabled and benefit starting, during which no income is payable under the policy. You should select a waiting period which takes into account any income you may continue to receive from your employment immediately after becoming disabled. The longer the waiting period, the lower the cost of cover.

How long will my PHI plan remain in force?
You can choose at outset when you want the plan to end. Subject to a minimum term of five years, you may choose your 50th, 55th, 60th or 65th birthday.

How ill or disabled do I have to be to claim a replacement income?
Providing your injury or illness genuinely prevents you from working (in accordance with the definition of disability on which your plan is based) you will be eligible to receive an income once your selected waiting period has expired.

How do I make a claim?
A claim form will need to be completed.

What level of benefit am I eligible to receive?
You can choose any level of benefit but the maximum you can insure is 65% of your income prior to becoming disabled, less the Single Person's State Benefit payable on incapacity. An upper limit is imposed for those who have high earnings. In the event of a claim, the maximum benefit payable will depend on whether you are receiving income from other sources (such as an employer's pension scheme), in which case your benefit may be reduced.

Can I claim for the same illness more than once?
Yes. With some policies if, after having received an income, you return to work but suffer a recurrence of the same illness within six months, your replacement income will resume immediately without the need for a further waiting period.

What happens if I change jobs?
The cost of your cover is based partly on your occupation at the time you took the plan out. If you change your occupation, you should inform the Insurer since this may affect the assessment of any subsequent claim.

What happens if I return to work on a part-time basis?
A proportionally reduced benefit may be paid for a period of time.

What happens if I return to work in a different, lower-paid job?
The benefit payable may be reduced in proportion to the difference between the earnings at the time of disability and those under the new employment.

What happens if I become unemployed?
If you become unemployed, cover will continue for a further 12 months, subject to the waiting period selected. As long as premiums are paid, you may be entitled to income protection, payable in the event of an illness or injury.

What happens if I become pregnant?
In normal circumstances you will be covered. If, however, your illness or disability is confirmed to be the result of your pregnancy or childbirth, the waiting period you have selected will not begin until three months after the day on which your pregnancy ends.

What other benefits are offered?
Your premiums can be guaranteed not to increase during the term of the policy (except if you choose the increasing option or you change jobs to a different risk category). Or you can arrange for your premiums and benefits to remain at the same level for the entire term of the plan, or to increase in line with the Retail Prices Index (up to a maximum of 10% per annum). Your premiums will be waived for as long as benefit is being paid

What happens if I die?
Your plan will lapse.

What happens if I want to surrender the policy?
The contract has no cash-in value at any time unless you have a 'Unit Linked' contract.

Termination of policy
The plan will terminate at the age specified on the policy document or on your earlier death. If premiums are not paid within 28 days of the due date, the policy will automatically lapse. However, premiums will be waived if you are in receipt of benefits. The policy may not be cancelled by the Insurer during the policy term except for non-payment of premiums.

Taxation
Benefits will not usually be subject to income tax for a period of up to 12 months under current Inland Revenue practice.