Income Protection

maldondo

Hi all,

Not sure if this is in the right place, if not Mod's please move.

I am self employed and recently took out a small income protection policy. Not big money by any means, unfortunately when away on holidays I broke my shoulder and damaged my back which will keep me from doing my job for hopefully under three months.

When I informed my broker he told me that I would have to be out of work for 13 weeks before it would kick in. I hope and should be back by then. So I've two questions that maybe someone can help me with.

1) Is this a standard condition of these policies?

2) I know I should have read the policy carefully but was extremely busy at the time with college and work and relied on my broker whom I trust and have used before to make sure I was taking out the correct policy. This 13 week period was not brought to my attention as I took out a lump sum serious injury policy at the same time so if I'd been made aware of the details I just wouldn't have bothered because it defeats the purpose.

Any advice before I speak with my broker would be appreciated.

Thanks

lilka

Hi, Yes I think it's pretty standard. There's usually a period of 13, 26 or 52 weeks before payment kicks in. I think it's an option but usually a minimum of 13 on these products. If you opt for 52 weeks for example then your premiums would have been less but obviously you wouldn't be entitled to anything for at least a year. Hope you recover soon though, best wishes/good luck

Browney7

Standard feature of products as said above. There are products with 4 and 8 week deferred periods but these would make the premium more expensive each month as insurers would have to pay a larger claim on long term claims and pay a lot more small claims (like yours) that with longer deferred periods they wouldn't see at all.

Most people in employment will have a level of sick pay for a number of months so the IP is usually structured to kick in after this runs out.

Think of it like an excess on a car or house insurance policy.

Tenigate

Yea, it's a standard feature of the product. I'd guess the policy schedule you received would have mentioned the deferred period even if the broker didn't.
When you were at college were you self-employed? If you were an employee, you may have been entitled to illness benefit and possibly sick-pay while out of work - so the 13 week deferred period wouldn't affect you as much.

Income Protection is meant to cover you when you're out long-term. 13 weeks is the minimum period for this type of product.

You could make a complaint that the broker mis-sold you the product if he claimed it covered something it did not (like paying out immediately).

You do this by trying to resolve it with the broker. If you can't resolve it with the broker, he will provide you with a letter that you can use to raise the case with the ombudsman.

maldondo

Tenigate wrote: »

Yea, it's a standard feature of the product. I'd guess the policy schedule you received would have mentioned the deferred period even if the broker didn't.
When you were at college were you self-employed? If you were an employee, you may have been entitled to illness benefit and possibly sick-pay while out of work - so the 13 week deferred period wouldn't affect you as much.

Income Protection is meant to cover you when you're out long-term. 13 weeks is the minimum period for this type of product.

You could make a complaint that the broker mis-sold you the product if he claimed it covered something it did not (like paying out immediately).

You do this by trying to resolve it with the broker. If you can't resolve it with the broker, he will provide you with a letter that you can use to raise the case with the ombudsman.

Thanks for the input, I understand now that its a pretty standard policy feature. My gripe is that I also took out some comprehensive serious illness cover at the same time. Unfortunately the six month period where I can't claim hadn't elapsed, but hey, that's sods law.

However, my thoughts are that I didn't need the income protection as well, if I had known about the 13 week kick in period I wouldn't have taken it out. Again, I know I should have read the small print and at the end of the day its know ones fault but my own. I would't be interested in reporting the broker or anything like that either.

I'm really thinking of future advice from this broker and whether or not those on here with the industry knowledge would question the ethics of selling me both policies.

I am self employed and have just finished four years of college and am beginning another two yearsa part time so I don't know where that leaves me in terms of social welfare. I'll be lucky to be able to work again before December.

Thanks

phormium

They are both very different products and designed to cover different things.

The serious illness cover would not have paid out on what happened you, it's for serious illnesses, heart attack/stroke/cancer to name a few and is usually a lump sum payment on diagnosis of an insured event.

The income protection is to replace your income in the event that you cannot work long term, this could be from something entirely different to what is covered under a serious illness policy.

For example friend of mine hurt their hand, not a serious illness that would warrant a claim under that type of policy but an illness that will see them unable to carry on with their work so would be one you would claim under an income protection policy. They didn't have income protection privately but the Invalidity pension kicked in.

Trish56

I agree you purchased two totally different policies. I'm surprised however that you did not receive brochures and a 'Letter of Suitability' for each product from your Broker prior to actually purchasing as this is now a requirement by the Central Bank for selling these products.