Income protection

lavoisier

Please help. A couple of years ago I purchased from my bank manager an income protection policy. He was fully aware of my situation, that I work in the NHS and what was my salary. We agreed on a benefit that would start 52 weeks into unemployment for health reasons. He did not tell me that any income I would receive at that point would be deducted from the premium. I discovered it recently. I made my calculations and based on the pension on medical grounds that I would receive from the NHS if unable to work after one year, the pension would be equivalent to the benefit from my income protection established with Aviva, therefore Aviva would not pay me anything and I am paying my monthly premium for nothing.

Have I been missold this income protection policy?

Thank you for your help

Thank you

forgotmyname

If the policy would pay out nothing because any sick pay etc. would be greater than the amount it pays out. Then i would say it was mis-sold.

But would they know how much you get if off work sick?

Does the policy cover a percentage of your salary? Is figure above below the amount you get when on sick leave?

Start 52 weeks into unemployment? So no cover for 12 months?

Does your sick or other payments whilst off work drop after this time?

lavoisier

Thank you for your answer. I opted for no cover for 52 weeks because in the NHS you receive full pay for the first 26 weeks off sick and half pay for the following 26 weeks. Therefore to reduce my monthly premium I opted for a policy that started paying after 52 weeks. The amount I chose was such that, in addition to my pension and other benefits would keep me with my old lifestyle. My bank manager knew perfectly my salary and that I worked in the Nhs. Despite this he sold me this policy and did not tell me that anything I receive while ill would be detracted from the benefit paid by Aviva.

ACG

It depends on your circumstances at the time of purchase, not what they are now.

As for if you can claim on your policy, these are fairly personal questions i know but they will help with working out if you can claim.

How much is your annual income?
How much would you receive if you were to be off sick permanently?
On your paperwork, does it say how much as a maximum Aviva will cover?
This will help determine if you are able to claim on your policy should you need to.

As for whether it was miss sold...
How much was your income then?
How much would you have received if you were permanently off sick?
Again, how much was the benefit?

Those questions will help to determine if it was miss sold. Your paperwork will/should say that any other payments you receive will be deducted from the benefit aviva can pay, so im not sure that alone is a reason for miss sale however if there was no need for the policy or your over insured then potentially there could be.

dunstonh

Please help. A couple of years ago I purchased from my bank manager an income protection policy.

A couple of the banks used to offer some really good PHI policies. However, over the years they moved more towards budget PHI plans or just plain PPI.

He was fully aware of my situation, that I work in the NHS and what was my salary. We agreed on a benefit that would start 52 weeks into unemployment for health reasons.

So, it sounds like a PHI on deferment but PHI plans dont cover unemployment. Just sickness.

He did not tell me that any income I would receive at that point would be deducted from the premium.

Premium is the monthly direct debit you pay. Is that what you mean or is it something else?

I made my calculations and based on the pension on medical grounds that I would receive from the NHS if unable to work after one year, the pension would be equivalent to the benefit from my income protection established with Aviva, therefore Aviva would not pay me anything and I am paying my monthly premium for nothing.

Are you of pensionable age? If not, then why are you looking at the pension?

My bank manager knew perfectly my salary and that I worked in the Nhs. Despite this he sold me this policy

You would have to go back to the 80s to find bank managers that sold regulated financial products. Are you sure it was a manager and not a clerk?

Despite this he sold me this policy and did not tell me that anything I receive while ill would be detracted from the benefit paid by Aviva.

NHS only pays for 12 months total. After that they pay no more sickness benefits. So, there would be no overlap with a 52 week deferment period. So, what is this income you are referring to?

Have I been missold this income protection policy?

Answer the questions above as we cant tell.

ACG

NHS staff get an ill health pension if they have to retire early due to ill health i believe. I used to come across it a bit when i worked at friends prov with our doctors ip policy.

kingstreet

AFAIK early retirement due to ill-health is at Trustees' discretion and subject to qualification. You should consider carefully if it is better to be insured, rather than hope you qualify;-

http://www.nhsbsa.nhs.uk/1308.aspx

Q. What are the qualifying conditions for ill health retirement benefits?

A. The NHS Pension Scheme provides two levels of ill-health retirement benefits, dependent on the severity of your condition and the likelihood of you being able to work again.

To qualify for a Tier 1 pension you must be permanently incapable of efficiently carrying out the duties of your employment because of illness or injury.

To qualify for a Tier 2 pension you must be permanently incapable of engaging in regular employment of like duration to your NHS job (i.e. either whole time or part time) because of illness or injury

Q. What is a Tier 1 pension?

A. If you are assessed as being permanently incapable of carrying out the duties of your own job you will be entitled to the early payment of the retirement benefits you have earned to date paid without any actuarial reduction for the early payment. In other words, these benefits will not be reduced to cover the extra cost of being paid before the Scheme’s normal benefit age.

Q. What is a Tier 2 pension

A. If you are assessed as being permanently incapable of engaging in regular employment of like duration you will be entitled to the retirement benefits you have earned to date enhanced by 2/3 of your prospective membership up to the Scheme’s normal retirement age.

dunstonh

If you look at Tier 1 qualification, you will see you only get what you have accrued to date. Tier 2 gives an enhancement but still lower than full entitlement.

I know someone that has been fighting for years to get an income from the pension scheme and the trustees wont pay out as it doesnt meet their medical criteria (she is still fighting on but she must be in to year 4 or 5 now). It does meet the PHI criteria though.

Also, what happens on long term illness where recovery is expected. The NHS pension wont pay out then.

opinions4u

We agreed on a benefit that would start 52 weeks into unemployment for health reasons

I'm assuming you mean illness, not unemployment. PHI doesn't cover unemployment.

You can remain employed and be ill on nil pay.

So employer pays you for 52 weeks.

Insurer pays you from week 53. You continue to pay the premium as well.

Fingers crossed, at some point you return to work.

I made my calculations and based on the pension on medical grounds that I would receive from the NHS if unable to work after one year

It is exceptionally rare that a pension scheme gives an accelerated benefit for ill health. You are usually looking at being incapable of doing any work ever again for this to happen.

The insurance remains in place because you continued to pay the premium. So if you're long term ill again the insurance steps in to help you.

Lavoisier wrote: »

I opted for no cover for 52 weeks because in the NHS you receive full pay for the first 26 weeks off sick and half pay for the following 26 weeks. Therefore to reduce my monthly premium I opted for a policy that started paying after 52 weeks.

Which makes sense.

The amount I chose was such that, in addition to my pension and other benefits would keep me with my old lifestyle. My bank manager knew perfectly my salary and that I worked in the Nhs. Despite this he sold me this policy and did not tell me that anything I receive while ill would be detracted from the benefit paid by Aviva.

For absolute clarity, imagine that it's week 53 and the NHS have stopped paying you. What income are you expecting to receive and who from?

For me, the PHI covers a clear need. There is a gap in income between week 52 and your pension paying out. You seem to think that if you're off ill for more than 12 months they will automatically retire you. It is very rare that any pension scheme would do this. The illness or injuries required would have to be exceptional.

So, for me, it's unlikely to have been mis-sold for the reasons you ask.

jamesd

What income did you tell the bank manager you wanted after 52 weeks? The amount paid out by the insurance or the amount paid out by the insurance plus any NHS pension that you might get if you qualified?

jem16

dunstonh wrote: »

I know someone that has been fighting for years to get an income from the pension scheme and the trustees wont pay out as it doesnt meet their medical criteria (she is still fighting on but she must be in to year 4 or 5 now). It does meet the PHI criteria though..

I agree with this. I have a friend who had a fall 2.5 years ago and has been unable to teach since. She applied for ill health retirement but was turned down as they felt there was still a chance that she might be able to return to teaching some day. She has had no income since the end of her first year of absence.

Ill health retirement is very, very difficult to get and should not be relied on.