Income Protection Requested Buy-out

Spookythecat69

Hi, I’m a newbie here, so go gently please. 

I am currently not working due to a significant mental health condition. Fortunately I am covered by an excellent income protection policy. My claim was accepted 3 years ago following medical assessment and reports. I receive 80% of salary and my policy is up to age 65. I’m currently 56. So potentially 9 years are left. I receive around $14k per month. 

All of that is obviously very good and I’m incredibly relieved that I took out this policy around 15yrs ago and kept up the premiums. 

My issue is that I would like to approach the insurer and ask if a lump sum buy out is possible. The conditions of my policy are pretty onerous and stressful. They cause frequent panic attacks and don’t help my already fragile mental health. 

Obviously, I know that any buyout would be well below the actual monthly value of the policy. But the thing is, I’m absolutely petrified of even approaching the insurer and asking! I’m not even sure why. 

Does anyone have any experience of how I could open this conversation? What I say and how I go about it? Is it even possible or will the insurer just say no? They are a very large multi national insurance company. 

Thanks so much. 

pramsay13

I don't know much about it but why would you want a lump sum rather than the security of monthly payments and why would the insurers want to do it? 
I'm assuming there is no chance of you going back to work?

Spookythecat69

Thanks for your reply Pramsay. The monthly medical process is incredibly stressful for me. And whilst the monthly amount is welcomed, I don’t cope well with the stress. It’s unlikely that I’ll work again in the same area but I see myself doing something very different if I get well. 

elsien

You say you are getting paid in dollars?
Just checking whether you are UK based or not.

Spookythecat69

Hi Elsien 
I’m in Sydney .. so AUD
thx 

Emmia

This is a UK site! 

I'm sure you can understand why the assessments are onerous as the insurance company would like to stop paying if you could return to work, especially as $14kAUD is a bit over £6.5k a month (that's a substantial income by any rating)

If you'd want the buy out, then ask... but it might be a low offer, the company might think you're getting better and so want to get as much money out of your policy as you can, before you fail the assessments, so they'd be able to remove the payment.

It would also be a one time thing, so there is a big risk if you don't actually return to work as your income will be cut off, and that one off payment would quickly dwindle.

DullGreyGuy

Spookythecat69 said:
Does anyone have any experience of how I could open this conversation? What I say and how I go about it? Is it even possible or will the insurer just say no? They are a very large multi national insurance company. 

Thanks so much. 

Its not uncommon in the UK for Group policies for the insurer to offer a final settlement rather than continue monthly payments, on individual policies its much rarer. I haven't done much work on insurance in Australia so cannot comment on how insurers there react. 

The other consideration will be around taxation and there you would need to chat to people in Oz if having a large payout rather than monthly could result in a worse outcome for you.