Income Protection Insurance Claim

SBeatt73

Hi all, newbie here. Been paying premiums for income protection for 8 years. Lost job and made claim. It got rejected recently on the grounds that dividend payments received per month (£400) from directorship exceed the "jobseekers allowance threshold." This is in the terms however no mention of what a jobseekers allowance threshold is or how much it is. It doesn't exist anywhere outside of the insurance company T&C's. They define "self-employment" as either director or principle of a company etc. yet a directorship is not self employed. Any advice would be appreciated as I've paid premiums without fail to cover loss of earnings yet told because I receive dividends I can't claim for the income I've actually lost!?
Thanks in advance 👍

Sandtree

It is common for financial institutions to consider directors with a significant shareholding as self employed either by literally calling them that or simply treating them in the same way despite not using the term. 

Do you have a link to the policy wording online?

What percentage of the company do you hold? How many other directors are there? Is the company still profitable to continue the dividends payment even though they had to let you go?

SBeatt73

Sandtree said:

It is common for financial institutions to consider directors with a significant shareholding as self employed either by literally calling them that or simply treating them in the same way despite not using the term. 

Do you have a link to the policy wording online?

What percentage of the company do you hold? How many other directors are there? Is the company still profitable to continue the dividends payment even though they had to let you go?

Thanks for the reply, it's my dad's small business, works for himself and I am a director on it, nothing more and receiving dividends. In addition to this I was employed full time and made redundant from my employed job hence my claim for the income protection. They've said I'm not entitled as the dividends exceed the "JSA Threshold" when I can claim JSA whilst working less than 26hrs and have under 16k savings.

tacpot12

Without seeing the relevant section of the Insurance Company's T&Cs, it is difficult to say whether you have a valid claim or not. Can you paste the relevant section(s) here?

Were you a director of your Dad's business when you took out the insurance and did anyone tell you that this unearned income would be covered by the insurance, or that there was any interplay between the benefits, earned income and unearned income if you needed to claim? I would be surprised that any unearned income would be covered by an unemployment income protection policy, but I would expect that the loss of earned income would be covered by the insurance, regardless of any unearned income you were due to receive. The contract term might be unfair. 

Weighty1

SBeatt73 said:

Sandtree said:

It is common for financial institutions to consider directors with a significant shareholding as self employed either by literally calling them that or simply treating them in the same way despite not using the term. 

Do you have a link to the policy wording online?

What percentage of the company do you hold? How many other directors are there? Is the company still profitable to continue the dividends payment even though they had to let you go?

Thanks for the reply, it's my dad's small business, works for himself and I am a director on it, nothing more and receiving dividends. In addition to this I was employed full time and made redundant from my employed job hence my claim for the income protection. They've said I'm not entitled as the dividends exceed the "JSA Threshold" when I can claim JSA whilst working less than 26hrs and have under 16k savings.

You must have been a shareholder in the business to receive dividends so whilst you may see the business as your dad's, technically it is YOUR business, either fully or at least a portion of it is owned by you.

Sandtree

SBeatt73 said:

Thanks for the reply, it's my dad's small business, works for himself and I am a director on it, nothing more and receiving dividends. In addition to this I was employed full time and made redundant from my employed job hence my claim for the income protection. They've said I'm not entitled as the dividends exceed the "JSA Threshold" when I can claim JSA whilst working less than 26hrs and have under 16k savings.

Lets be honest, there is a reason why people make their partners/children co-directors and shareholders of their businesses and most the time all are happy with the lower HMRC bills that come as a result.

Unfortunately it creates complications... so legally up until recently you had two jobs with two firms. You have only lost one of your jobs not both and you continue to receive an income (in the form of dividends rather than salary but again that helps with the tax man) from your second job. As you have a director and shareholder in your second employer there is no reliable mechanism to establish how many hours you are putting in.

As already asked and repeated by others, a link to the wording or a copy/paste of the wording will help understand the insurers response and see if there is any argument against their decline.