Reply to: Income protection: another PPI?

[SueEllen]

DO they "review" it every 5 years? and surprise surprise it always reduces the sum assured for the same premium
tw@ts!

It's his fault for being 5 years older each time and being more likely to die.

[Troll]

Having said that I do have life assurance until I'm 65.

DO they "review" it every 5 years? and surprise surprise it always reduces the sum assured for the same premium
tw@ts!

[adam42]

I sent off the enquiry form to Contractor Financials. Let's see.

[Spartacus]

PPI: protects repayments on a specific credit product. It's mostly the single premium products lumped onto a loan that were mis-sold and sometimes sold fraudulently. The regular premium products aren't nearly as bad or expensive. They are cluelessly lumped together and due to volumes banks just choose to pay up so it is assumed everything was mis-sold.

Income protection: provides an income if you fall sick, out of work and/or suffer an accident. Not tied to a particular product. Usually underwritten. They are priced according to how much cover you want and as with any form of insurance due regard should be given to the T&C's. Their value can be be considerable if you do need to claim on it, especially due to an injury.

I have an income protection policy with Aviva.

This morning's headlines: ContractorUK in "someone posts who knows what they're talking about" shocker.

[Scruff]

Does this insurance cover for stuff like Jury Service?

Not unless it makes you so ill that you can't work for the minimum period before claiming?

[adam42]

Does this insurance cover for stuff like Jury Service?

[Boris4PM]

....are there any providers who will consider dividends as part of an Income Protection policy?

Some policies will be based on 'earnings'. So in the event of a claim you need to show proof of what you have earned over the preceding x months. Whether earnings would include salary plus dividends, I don't know. But I would be interested to know!

Just realised this thread is from March 2014.

[DodgyAgent]

For someone without a sense of entitlement does the income protection policy make much sense? Anyone has considered/taken out one?

The most important insurance is permanent health insurance

[jbryce]

Income protection is usually based on salary, not dividends!!

I do believe the odd contractor has fallen into this trap.

You need to weigh up the cost of insurance covering you for loss of work with building up a warchest.

Your own warchest is by the far the better tool, if you have enough. Cover for disability makes more sense for most contractors.

It's unlikely you couldn't get some sort of low paid permie work in the event of a bad contractor market.

....are there any providers who will consider dividends as part of an Income Protection policy?

[SueEllen]

Anybody know how the providers of these policies deal with mental health issues (e.g. depression, anxiety), particularly chronic or recurrent issues?

Anything recurrent they wouldn't cover you for as the risk is too great.

[TheCyclingProgrammer]

Anybody know how the providers of these policies deal with mental health issues (e.g. depression, anxiety), particularly chronic or recurrent issues?

[mickey]

Thanks so much. That link is a really good one.

[Zero Liability]

Aviva. Mine is £28 pm, covering £1,600 in income, so yes it does work out to more than £1 per £100 covered.

Re the pre-existing medical condition, they're looking for anything that has occurred typically within the last two years and is capable of forcing you out of work. Of course incurable conditions and such will count. Aviva has a nurse that runs through a questionnaire over the phone with you where they try and fish out any relevant conditions, and they usually will also solicit a medical report. They will then specify what is excluded. You can go with a moratorium option, as well. This sums it up well.

[mickey]

Yes, pretty good summary. They're valuable policies. In regards to the premium, for my policy it's £28 pm for £1500 benefit. This is inflation-indexed, with guaranteed premiums and a 3 month period for which you're not covered, because I'd have enough in savings to cover this long at the very least.

It's true that it's better to build up a war-chest of savings and investment income, but I don't think one should confuse this policy with PPI, which has much more limited applicability, and in some cases cost nearly half the loan amount itself. They're a different kettle of fish.

It turns out the income protection insurance for self-employed contractors is a lot more expensive, much more than £1 per month for £100 of cover. Who are you with?

When it comes to pre-existing conditions the policies I have looked into are rather unclear ranging from listing every GP visit to being out of work for over 30 days. What do they want to know?

[Zero Liability]

Mine is with Scot Prov.

Income Protection taken through the right insurer is invaluable for the self employed as they do not have access to PAYE benefits such as sick pay. Essentially, a business could fold very quickly in the event of long term sickness.

I completely agree, that there are some unbelievably bad policies out there though. As always the fine print needs to be examined. Any policy that is not own an "Own Occupation" basis should not be taken up. "Worker tasks" policies will very rarely pay out on the basis that you can still work albeit in another job when sick - exclusions include not being able to wash and bathe yourself. Realistically, you are going to need to be in a very bad way to win your claim.

If you take up a policy, ask for guaranteed rates - you don't want your premium increasing because of the insurers claims that they have had throughout the year.

Finally, to ensure that your benefit is not eroded by inflation, make sure that your policiy is linked to the retail price index.

Yes, pretty good summary. They're valuable policies. In regards to the premium, for my policy it's £28 pm for £1500 benefit. This is inflation-indexed, with guaranteed premiums and a 3 month period for which you're not covered, because I'd have enough in savings to cover this long at the very least.

It's true that it's better to build up a war-chest of savings and investment income, but I don't think one should confuse this policy with PPI, which has much more limited applicability, and in some cases cost nearly half the loan amount itself. They're a different kettle of fish.