Disability Insurance

al3x1k0

Hello, I'm trying to help my uncle (35 years old) buy disability insurance. I want to cover his salary (income protection insurance) and I want him to get a lump sum of at least 400.000 pounds so he'll be able to invest it and have his pot ready for his retirement as planned. I got several quotes for income protection but I can't find anything for the lump sum in case of disability.

Could you give me any hints? I'm an insurance broker in Greece and I'm shocked of not being able to find a solution for such a simple coverage.

Aretnap

A policy that pays out a lump sum (as opposed to a regular income) in the event of 'disability' doesn't sound like a standard product in the UK, and it doesn't sound like a particularly simple product either to be honest. How is disability defined? Something that prevents you from working permanently, or just for the foreseeable future? If permanently, in whose opinion would it have to be permanent? If your condition improved, or if changes in medical science/treatment made it possible to go back to work again, would you have to repay the money, or a portion of it? Those are just a few of the questions that pop into my head - I'm sure there are plenty of others that would have to be defined.

The closest UK mass market equivalent would probably be critical illness insurance, which pays out a lump sum if you are diagnosed with one of a predefined list of conditions with specified severity. However critical illness is not the same as disability; there are illnesses which will be covered which will not always lead to long term disability (eg heart attacks, cancer) and conversely diseases which will not be covered, despite having the potential to keep you off work long term (eg mental health problems, arthritis).

al3x1k0

First of all, I wish you happy new year and best of luck to you and your family.

I'll give you some facts about how it works here in Greece. We call it permanent disability insurance. Insurance company define permanent disability as 67% disability which is defined by a national doctor's committee. So if they verify that you have at least 67% disability and it's unlikely to get better, you get half of the money right away and the other half after a year.

I checked out critical illness insurance and I'm well informed because we use it here in Greece too. It sounds interesting, but as you acknoledged it's not the same and there's chance that he'll not be covered.

So how would you cover someone, so he'll be able to supplement his income (by 60-70%) and also allow him to reach his retirement goal?

lisyloo

You might wish to look at “waiver of premium” benefit on the pension.
This waives premiums if you are disabled and might be what you require.
It doesn’t provide the lump sum but provides the contributions that would normally build the pension fund.
I believe you add it onto the pension as opposed to get a standalone policy but I’m not an expert.

al3x1k0

His pension pot is with Scottish Widows. Total contribution per month at the moment is 500 pounds alongside with his employer's match. Do you now if they offer such a thing and if it's an expensive coverage or not?