Income Protection Insurance - Multiple Policies?

shackalak

I'm not absolutely sure but I think they will both operate to their own individual limits (subject to the overall maximum). I would think they will need to agree with each other who will pay out what.

Good luck with your claim. I've sold IPP for years and in all honesty, I wish i'd taken some out for myself. Hinds site is a wonderful thing. I've recently been the victim of a conman and identity theft (horrible situation for anyone - especially when working in financial services!) and the overall result has left me off work for the last 12 months (currently in the middle of a messy police fraud investigation). Never had a day off sick in 25 years and then - wham, i'm hit with this. I'm covered by work for 2 years and always thought that would be sufficient but you just never know what's round the corner.

My employers provide the 75% cover after 6 months and they deduct from this the amount of the ESA I now get, so i've now got the lovely task of exploring the benefits system which I've never experienced before.

In respect of your critical illness cover, check if it covers angioplasty. Its hard to get cover for this now because its considered a relatively common procedure. If you have an older plan, you may well have cover for this.

If you have any life assurance policies, it's worth checking if they include Payment Waiver. If you are claiming on the IPP, you may also be able to claim on Payment Waiver you have on other plans (some companies need you to be off for 26 weeks before you can though). It's worth noting that you generally do not have to pay the premiums on IPP plan in the event of claim and if the plan also provides your critical illness cover, you may not have to pay for this either (always check with your insurance company first though).

kingstreet

As shackalak says, when the benefits from PHI were taxable after one complete tax year, the insurer would allow a maximum benefit of 75% of earnings, less SSP.

With the rule change to make them non-taxable, the potential "moral risk" increased as it would then be possible to be better off sick than it would be working. That's why insurers aggregate policy benefits and earnings so you're limited to around 50% overall. They simply want us to have an incentive to return to work as quickly as possible.

I haven't checked this, so I may be wrong, but the rule change didn't specify particular products or a timescale for when a policy had to be taken out, so I'm pretty sure if you have a plan with a 75% less SSP maximum benefit it would be paid tax-free, as would a new one with a lower limit.

shr_2

Thanks Shackalack and Kingstreet.

Shackalack - so sorry to hear about your situation. No-one likes to think that they will ever be off sick - me included. I think, like many people, that I thought that would never happen to me, and to be honest I was also in denial for a long time about how unwell and dysfunctional I was. But now I am just thankful I have some cover (assuming they will pay out), which I hope will cushion me / relieve a lot of stress - for me and my family who are worried out of their minds about me and my health / finance situation - while I focus on getting better and back to work. Its all too easy for people to say that IP cover is a waste of time - which may be true if there is a poor payout rate, but otherwise I can now see that it is essential.

I hope you manage to get the support that you need. Its difficult when you've always worked to have to look at benefits and insurance. I hope that insurance providers etc. understand how difficult it is not to work, to be able to admit to yourself that you can't work, and how much most people would like to not have to rely on any other support. I'm glad that at the very least you have IP support from your employer.

Best wishes

shr_2

Shackalack / Kingstreet,

Just to summarise.

Since one insurance policy has a limit of 50% and the other a limit of 75%, the payout agreed between the two providers will effectively have to have a limit of 50%.

Otherwise if the second insurance provider works up to their 75% limit, it would cause the first insurance provider to breach their 50% limit condition.

Correct ?

Also, whatever is paid out will be non-taxable.