If you were sick or injured – and couldn't work – how would you pay the bills?
With coronavirus still very much a threat it’s understandable that many people will fear that they could fall ill, potentially for a long time, and that their income and lifestyle could be affected as a result. For those who won’t receive sickness pay from their employer, or for the self-employed whose illness may impact their current income as well as their future livelihood, the fears may be even greater.
It’s no wonder, therefore, that income protection insurance could be seen as a saviour to many but what are the chances of being accepted for a new policy, will the fact that you’ve been on furlough or are self-employed affect this and, if you’ve already got a policy, are you likely to get a pay out if COVID-19 is the reason for your claim?
We posed the questions to Andy Trantum, Operations Director for Embrace Financial Services who work in partnership with Your Move.
What is income protection insurance?
It’s classed as a protection insurance and is designed to offer a monthly benefit if you are unable to work due to illness or accidental injury. It can help ease the stress and worry that individuals or families often face at such a time, as I’m sure some who have recently suffered coronavirus will confirm.
I’ve already got an income protection policy and have coronavirus, will I be able to claim under my policy?
Yes it’s highly likely that, even if the claim relates to coronavirus, you will still be able to benefit from your policy if you have been unable to work for a period of time. Aviva, for example, who provide the protection policies that Embrace Financial Services offer, has confirmed that customers who make a claim as a result of coronavirus will be treated the same way as those with any other condition. Premiums need to be paid (unless customers are using its Coronavirus deferral scheme) and the claim would be assessed on their ability to perform their occupation as a result of contracting the virus. In 2019 Aviva paid out 85.7% of income protection claims.
I’d like a policy – are they still being offered and will the fact that I’ve had coronavirus affect this?
There are still income protection policies being offered although, as well as the usual medical questions, you may have to answer additional ones about COVID-19 and the affect this may have had on you. Acceptance by the insurers will depend on all the answers provided. The same applies for employed and self-employed applicants.
I’m on furlough now, can I still apply for an income protection policy?
Yes although there may be some conditions attached. Aviva, for example, will not accept an application from someone on furlough until they have returned to work for a minimum of 16 hours a week. On furlough you are still gaining an income and it’s only when you return to work that you risk losing your wage through illness or accidental injury. The level of benefit may be affected because of the period you were on furlough (and the subsequent lower income) so ideally you should gain advice from a qualified financial adviser.
I’m self-employed – is it different for me?
Not really. Insurers will view self-employed people the same as those who are employed. The only difference might be the way the benefit is calculated as the focus will have to be on annual earnings over a set period and/or the benefit they have received (or are receiving) under the Coronavirus Self-Employment Income Support.
Where can I get help about income protection?
At Embrace Financial Services we’ve got a team of Financial Advisers who can offer advice and support in applying for income protection and who can answer further questions you may have. And, where the appointment relates only to protection products, and subsequently leads to products being arranged through Embrace Financial Services, there will be no fee payable to us so it’s very much a case of ‘nothing to lose’ but potentially a lot to gain.
If you are an existing Aviva policyholder, you may also like to see the special section of their website which details the Aviva Support and Advice being offered at this current time.