Income Protection Insurance - help?

ferox666

Hi all
I am in early 30s and looking for income protection insurance (that would give a guaranteed monthly payment until retirement (or recovery, if applicable) if I had illness or injury/disablement that meant I was unable to work.

The two that look most appropriate for me (from headline conditions and prices) are from The Exeter and Aviva.

I know nothing really about this type of insurance other than I'm starting to think it would be a good idea to have.

But I am confused by all the options and would be grateful for any advice:

1) People have recommended "own occupation" cover as being the most preferable option, but would that not mean I couldn't claim if I could do ANY type of work (which is surely rare, technically speaking e.g. if in a wheelchair/bedridden I would still be able to answer a phone, type, etc);

2) Is benefits and/or other insurance/income taken into account for claim amount e.g. I noticed you can only insure up to 50% of gross salary and that you can't be "better off" receiving insurance than when you were working. If my employer provided insurance cover for 1 year after any accident/disablement, would this invalidate the policy I am wanting. The short-term work-provided policy is good but a year is not enough if there was permanent illness. Also if I insured for £1,400 a month, would the insurer only pay £1,400 LESS any amount provided in state benefits?

3) One option has a fixed monthly price for life of policy, the other subject to increase . I assume this means the first one will also mean claim amount is fixed - so becomes less valuable each year as inflation erodes, so maybe the increasing price one is better.

4) I sought treatment for depression around 7-8 years ago, will I need to get exact dates from doctor to disclose this? I assume if that wasn't disclosed it could invalidate the whole thing even if illness/claim unrelated to a past mild depression.

5) Anything else to look out for in terms/conditions, options, etc? I am perhaps paranoid but I find it difficult to trust insurance companies, I imagine they would look for any little get-out/clause to avoid having to pay...I therefore want to disclose everything that needs to be disclosed and comply with all terms and technicalities and do everything I can to make the policy payable - so I can have peace of mind. Hopefully I would never need to claim it but it would give reassurance knowing it's there. Although I read they are well-regulated in the UK and many companies are very fair.

Basically I want cover in the event of being unable to work due to injury, accident, illness, disablement, attack resulting in any of these, etc.

6) It looks like I can defer any claim and start claiming after 6 months of injury/disablement/illness - that lowers the premium so seems sensible as I would only intend to claim if I did indeed have a long term issue.

Thanks so much for reading this, hope someone can help

kidmugsy

http://monevator.com/do-you-need-income-protection-insurance/

Weighty1

ferox666 wrote: »

Hi all
I am in early 30s and looking for income protection insurance (that would give a guaranteed monthly payment until retirement (or recovery, if applicable) if I had illness or injury/disablement that meant I was unable to work.

The two that look most appropriate for me (from headline conditions and prices) are from The Exeter and Aviva.

I know nothing really about this type of insurance other than I'm starting to think it would be a good idea to have.

But I am confused by all the options and would be grateful for any advice:

1) People have recommended "own occupation" cover as being the most preferable option, but would that not mean I couldn't claim if I could do ANY type of work (which is surely rare, technically speaking e.g. if in a wheelchair/bedridden I would still be able to answer a phone, type, etc); Own occupation means you are covered if you CAN'T do your own occupation and that you won't be assessed against your ability to do another. This IS the best definition on the market and one which most insurers follow in 95% of cases these days.

2) Is benefits and/or other insurance/income taken into account for claim amount e.g. I noticed you can only insure up to 50% of gross salary and that you can't be "better off" receiving insurance than when you were working. If my employer provided insurance cover for 1 year after any accident/disablement, would this invalidate the policy I am wanting. The short-term work-provided policy is good but a year is not enough if there was permanent illness. Also if I insured for £1,400 a month, would the insurer only pay £1,400 LESS any amount provided in state benefits? It wouldn't invalidate the plan if you had existing cover, however, it would likely mean that whilst the existing cover was paying out the insurer would limit the amount you could claim on their plan. Some providers will state into account some means tested state benefits but normally that is only the case if you are taking the maximum level of cover and it will differ from insurer to insurer.

3) One option has a fixed monthly price for life of policy, the other subject to increase . I assume this means the first one will also mean claim amount is fixed - so becomes less valuable each year as inflation erodes, so maybe the increasing price one is better.Not necessarily. For both plans you should probably choose to index link the cover so that it increases with inflation - this is very important for a plan which is covering you over the long term. The Exeter plan will increase as you age, as they assess the biggest risk as being your age, as well as increasing with inflation each year (both premium and cover level). The Aviva plan would only increase with inflation. If you have the illustration PDF's for both options look at the total premiums payable over the term of the plan. I'd expect the Aviva figure to be far lower in most instances.

4) I sought treatment for depression around 7-8 years ago, will I need to get exact dates from doctor to disclose this? I assume if that wasn't disclosed it could invalidate the whole thing even if illness/claim unrelated to a past mild depression.Whether you need to disclose it will be dependent on the application questions. After 7-8 years, unless you were referred to a psychiatrist then you may not need to disclose it. Just answer the questions honestly and you'll be fine! Wore case scenario they may put a mental health exclusion on the plan.

5) Anything else to look out for in terms/conditions, options, etc? I am perhaps paranoid but I find it difficult to trust insurance companies, I imagine they would look for any little get-out/clause to avoid having to pay...I therefore want to disclose everything that needs to be disclosed and comply with all terms and technicalities and do everything I can to make the policy payable - so I can have peace of mind. Hopefully I would never need to claim it but it would give reassurance knowing it's there. Although I read they are well-regulated in the UK and many companies are very fair.Both of those companies are VERY reputable. There's not really anything else to look out for as the plans are pretty straightforward. As long as a doctor is signing you off as being unfit for work you can claim on the plan after you pass the chosen deferred period - bosh - done!

Basically I want cover in the event of being unable to work due to injury, accident, illness, disablement, attack resulting in any of these, etc.

6) It looks like I can defer any claim and start claiming after 6 months of injury/disablement/illness - that lowers the premium so seems sensible as I would only intend to claim if I did indeed have a long term issue. Yep, you could even extend that up to 12-months to take into account the existing plan if you wished although the difference in a 6-month and a 12-month deferred period is normally quite small.

Thanks so much for reading this, hope someone can help

Hope that helps clarify the questions a bit