UK Income Protection Insurance - Unemployment Sickness Accident Redundancy

Q. If I do not claim from my income protection insurance policy, do I get anything back?

In most cases the answer is No. A conventional income protection insurance policy has no investment element built into the premiums. If the policy expires and you have not made a claim you will receive nothing - there is no surrender value. However, thought some insurers sell unit-linked income protection insurance policies that do have a surrender values, these tend to be more expensive. No one should buy such a policy on the strength of its expected future investment value - it is the quality of income protection that is paramount.

Q. Do employers offer income protection insurance to workers?

Some do and if your company offers income protection insurance, make sure you are covered by the scheme. Many employers offer group income protection cover to their workers free of charge, but even where income protection cover is not free, premiums will usually be much cheaper than if you bought the identical income protection cover yourself.

Q. For whom is income protection insurance suitable?

It should be a priority for anyone for whom loss of earnings will cause great financial hardship. The self-employed often stand to lose the most if they are unable to carry on a business because of long-term illness. For employed people, who should initially receive sick pay from their employer, income protection insurance benefits should be timed to start when sick pay ceases. Income protection insurance cover should also be considered by people who look after the family home - it can enable you to pay for home help if you become ill.

Q. When my income protection insurance policy is paying benefit, must I continue to pay the monthly premiums for the cover to remain in force?

No. Premiums are normally waived. You will only start paying them again once you return to work.

Q. Will I have to undergo a medical to obtain income protection insurance cover?

Not necessarily. As with private medical insurance, income protection insurance companies normally offer cover in two ways:
1. Medical history declaration. A medical examination may be required after you have provided details of your medical history. If you have a complaint that is likely to recur, the insurer will either exclude that condition from your cover, charge you an extra premium to include it, or refuse cover absolutely. It is vital that you provide the insurer will all you medical details - if you fail to declare key information a claim for benefit could be refused.
2. Moratoria. Under this format income protection insurancecover is offered immediately and you are not require to fill in any declaration form or undergo a medical. But the policy will automatically not cover any medical. But the policy will automatically not cover any medical condition that existed before you took out the insurance until you remain free of treatment advice or medication for that condition for a minimum period, usually two years. Through policies of this kind are easy to arrange, they can cause problems later when a claim is turned down.

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