Employment and Income/Mortgage protection

[mikethebike]

Hi,

I would like to ask a theoretical question

Lets say I have Mortgage/Income protection, which kicks in 3 months without employment (not self imposed).

I will be made redundant from a permie role in the next few months
I start up a limited company, with me as sole director
I get a contract, but my company does not pay me any money (the ltd co does of course get paid by the client)

Could I still receive the income/mortgage protection payments?

The contract will be for training purposes (which is why I will not get paid), and the money in the company will give me a nice buffer in case I cannot find a contract in the future.

[TykeMerc]

I'd say that was reasonably close to perpetrating fraud.

[mikethebike]

No need to be so brutally honest

I just wondered, because being a director does not mean you are employed? And I would not be drawing any pay etc from the company.....ok, yeh it does sound iffy now you mention it!

[Mark McBurney@CMME]

Income protection and mortgage protection are two separate things.

Mortgage protection is very scarce now, and is generally provided by a mortgage lender alongside your mortgage, so that it covers your mortgage payment after XX weeks of being unable to work.

Income protection is a separate policy that provides you a monthly income after XX weeks of being unable to work - NOT including redundancy - underwritten/verified at the point of CLAIM rather than application. In your example you are not out of work as you are then self-employed, ergo no payout. They would probably ask for a projection from your accountant re: this year's income and then ask why you wouldn't be paying yourself (note that you wouldn't necessarily have to, the provider could just work off the company profit).

It sounds as if what you're talking about is some sort of 'Accident, Sickness and Unemployment' cover, which would be a bugger to try and claim on I suspect in ANY circumstance!

You then have a minefield of what you cover and how you pay it - a mortgage is a personal debt so paying for protection against it from a limited company will undoubtedly open some sort of tax on the benefit in kind, or may even be impossible.

I think that's a bit more conclusive than the fraud theory, though no more accurate!

[JRCT]

I presume, although I don't know, that you would have to be claiming some form of income support/ jobseekers allowance to 'prove' that you're not working.

How would it be if you genuinely left your permie job and then volunteered to work for a charity for free? I suspect that wouldn't work either.

[TheFaQQer]

I presume, although I don't know, that you would have to be claiming some form of income support/ jobseekers allowance to 'prove' that you're not working.

How would it be if you genuinely left your permie job and then volunteered to work for a charity for free? I suspect that wouldn't work either.

Claiming JSA is easy enough. PsychoCandy does it after every gig, on the grounds that you can.

[northernladuk]

Claiming JSA is easy enough. PsychoCandy does it after every gig, on the grounds that you can.

I thought that had changed cause he doesn't pay any NI or something. There was a thread not so long ago he commented which made me think this but I can't remember the exact details.

[speling bee]

Hi,

I would like to ask a theoretical question

Lets say I have Mortgage/Income protection, which kicks in 3 months without employment (not self imposed).

I will be made redundant from a permie role in the next few months
I start up a limited company, with me as sole director
I get a contract, but my company does not pay me any money (the ltd co does of course get paid by the client)

Could I still receive the income/mortgage protection payments?

The contract will be for training purposes (which is why I will not get paid), and the money in the company will give me a nice buffer in case I cannot find a contract in the future.

Ask the product provider.

[TheFaQQer]

I thought that had changed cause he doesn't pay any NI or something. There was a thread not so long ago he commented which made me think this but I can't remember the exact details.

Possibly. I have no idea what you need to do to sponge off the state, as I've not done it.

My point was just that if you need to be claiming something to get the insurance to pay out, there are people that you can ask about how to do it, though.

I suppose you could theoretically get the best of all worlds - claim on the insurance, be claiming JSA to show that you are out of work and looking, and still be working unpaid on plan B. Why doesn't everyone do it? That certainly would be a worrying trend.

[speling bee]

Possibly. I have no idea what you need to do to sponge off the state, as I've not done it.

My point was just that if you need to be claiming something to get the insurance to pay out, there are people that you can ask about how to do it, though.

I suppose you could theoretically get the best of all worlds - claim on the insurance, be claiming JSA to show that you are out of work and looking, and still be working unpaid on plan B. Why doesn't everyone do it? That certainly would be a worrying trend.

A worrying new trend.