National Minimum wage and Insurance

tracyfox1

I was told that if you have an accident/illness in or out of work, cannot work again, your insurance will latch onto the words 'national minimum wage'. Even if this only applies to a very small part of your wages/salary, they will only pay out on this. I have searched the internet, my financial advisor does not know the answer, my employer has asked me to prove if this is correct but I am stuck. Has anyone else heard of this? Was my colleague making it up? TIA

[Deleted User]

What insurance are you trying to claim on?

tracyfox1

not trying to claim, just trying to fight the words national minimum wage in my contract in case I do have to make a claim

dunstonh

What type of insurance are you referring to then?

[Deleted User]

It would still be beneficial to explain what insurance you (could in theory) be claiming on to clarify if you need to make a big deal out of this or not. What type of policy e.g. ASU / MPPI sort of thing, who it is with etc. It could be a lot of worry for nothing - it won't be solved unless you can provide more information.  

tracyfox1

I understand you now sorry. I have insurance on my mortgage and life insurance. I am not sure of the exact wording of the insurance is. If I survive an accident, but left with life changing injuries so I could not work again, would I be paid out on my normal hourly rate or NMW rate? On my life insurance would my adult children be paid out the sum agreed. I presume the life insurance will be ok. So I think my main concern is the mortgage protection and the critical illness cover I pay into. I thought my question was straightforward but I now see there is a lot more to it than I initially thought. Is there anything else informationwise that I need to give so I have the answer that puts my mind at rest?

Nearlyold

Life insurance pays out if you die.
Critical Illness cover pays out a lump sum if you suffer a critical illness.
Income protection type products typically pay an income if you are unable to work through illness, though some also cover unemployment.
Please have a look at your policy documents and tell us what type of cover you have, if you are unsure tell us the Insurer and what the policy is called and that should be enough information for someone to clarify what your cover does. or at least get some sort of clarity.

[Deleted User]

I would add though, it's highly unlikely an insurer would get away with paying you NMW through an MPPI style policy if you could show you earned a lot above it every year, even if some of it was based on NMW. I am struggling to imagine what your situation is, but say you were on NMW for 10 hours a week and earned say 2x NMW for 20 hours a week on top, at the same job, your monthly pay slips would be evidence of your earnings that any policy would pay out on. Thus I suspect your colleague is talking out of the top of his hat if he thinks the insurer will see the words NMW and refuse to pay anything on top of that.

tracyfox1

Thank you, I'll look through the policy forms. On a night shift we get 7.5hrs enhanced pay. If no work is needed, which does not happen very often, there are 5 hrs where we could sleep and that is the time we get 5hr NMW. Depending on which day of the week it is, it's either  a 12 or 15 hr shift. We average 2 nights a month. Your last sentence does make me feel better.

[Deleted User]

As ever with insurance matters, if there was a problem, you can complain to them and ultimately go to the ombudsman if you feel the answer from the firm is not a favourable one - they at least will review all the evidence impartially e.g. you showing your P60 from the last x number of years, showing what you earned

tracyfox1

Thank you, just wanted to avoid the complaints route in the future if possible