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Income Protection Insurance usually pays out a tax-free monthly income to those who are unable to work because of a qualifying illness or disability.
Things to think about
There’s normally a waiting period (also known as a ‘deferred period’) before the income is paid. This will have been chosen at the time the policy was taken out and could be from four weeks up to two years. Often, it can be linked to when an employee’s sickness pay ends.
The payments from Income Protection policies are tax-free. The level of income will have been chosen at the time the insurance was taken out. It’s typically between 50-80% of the person’s full pay before they claimed.
It’s important to be aware that some insurers will deduct an amount equivalent to the state benefit Employment and Support Allowance (ESA) from the income before it’s paid to the member.
The insurance usually carries on paying out until the person is no longer classed as being incapacitated, they die or retire. But some policies pay out only for a maximum term (five years, for example). It’s important to check the policy’s terms and conditions to be sure.
Remember that income and lump sum insurance pay-outs may affect means-tested state benefits.
Making an Insurance claim
The first step is to contact the insurance company. Give them the policyholder’s name, policy number and details of the cancer diagnosis. This can be done by phone, email or letter.
If the insurance company is contacted by phone, they will usually try to gather as much information as possible, so calls can last some time. But, this method may speed up the overall time involved in assessing a claim.
Insurance Claims advice
If you are looking for advice on making an insurance claim you can contact your insurance company for more information on what their specific process looks like. Normally you can expect a claim to take around 8-10 weeks (depending on how long your medical professionals take to send the information).
What happens next?
After the initial contact, the insurer will normally send a claim form for completion and return.
The information the insurer asks for will normally relate to the cancer diagnosis, such as the date of diagnosis, the treatment required and cancer type. They will also ask for GP and Oncologist details.
Before paying out on a claim, the insurer will make careful checks to make sure the claim is valid. This is likely to include getting medical reports from the patient’s GP and cancer specialist. They may also be asked to have a medical examination with another doctor.
Assessing a claim can take several weeks, so it’s important to make the insurer aware of a potential claim as soon as possible.
What happens next?
The insurer may continue to regularly review the claim whilst it’s in payment. They are looking to see if there is any new medical evidence that may show a change in the health situation. The payments may stop if the member is considered able to return to work.
If the member becomes well enough to return to work, but has to work fewer hours initially, the income protection policy, depending on the specific terms and conditions, may continue to top-up their income until the member is able to return to their usual hours.
Insurance Claim declined
If your insurance claim is declined you can make an insurance complaint. This means if your insurance claim is rejected you can complain directly to the insurance provider or the financial ombudsman service (free of charge). You can also use organisations like Resolute Claims who can provide you with free information and guidance around appealing an insurance decision.
