How risky do insurers view your job?
Protecting our income is something that more and more of us are becoming aware of. After all, if you suddenly lost your income through no fault of your own such as due to a prolonged illness or accident that left you unable to work, how would you manage without your salary?
The solution could be income protection insurance, which pays out a monthly tax free cash amount in the event of accidental injury or illness which prevents you from working.
Payments runfor a period of time or until you get back to work – whatever happens first.
Considerations
If you are considering buying income protection insurance, then it is important to understand how your occupation can play an important part in the cost of your protection, as well as the definition of cover you can apply for.
Protection insurance specialist Tom Conner refers to an occupation risk tool that helps you see just how risky your occupation is deemed to be by insurers, and is a good starting point. He says: “The riskier your occupation is judged to be, the more the protection will cost. In some very rare cases, you may be declined cover if your role is seen as very dangerous.”
Mr. Conner adds that people need to be aware of the definition of cover they are offered, particularly those in manual jobs, where there may be a limit to the cover available.
There are several definitions of cover:
- Own Occupation: this offers the most comprehensive level of cover and will pay out if you are no longer able to carry out your occupation – even if you are fit enough to do an alternative job.
- Suited Occupation: this offers a middling level of protection and pays out if you become unable to do your own job or a similar one that suits your qualifications.
- Any Occupation: this policy offers you the lowest level of protection and will only pay out if you become too ill to do any kind of paid work. So, if you were unable to carry out your existing role but could be employed doing something else, then the policy would not pay out.
- Work Tasks: Under this definition the income protection policy would payout based on your ability to complete certain tasks. For example, common tasks include walking lifting, climbing, bending and seeing. It is usually the case that the policy would payout if three or more of these tasks cannot be completed without further risk to health.
The tool enables you to enter your occupation type, select the level of clerical versus manual work you do, plus answer questions on business mileage and overseas trips as part of your role.
The results will show what risk class you are and the likely definition of cover available to you. So, for example, a builder who does lots of business mileage and a purely 100% manual job will typically be in risk class four, compared to say a desk bound Call Centre manager who would be risk class one.
People in risk class one will typically be eligible to apply for ‘Own Occupation’ cover, whereas someone who is deemed at a higher risk may not.
Mr. Conner warns: “For the builder, it is imperative that he or she double check the policy terms in detail, as most insurers typically will not offer an ‘Own Occupation’ incapacity definition given the current job role, but more likely a ‘Work Tasks’ definition. This means that, in the event of a claim, they would have to be seriously incapacitated in order to receive a payout.”
He recommends that anyone considering income protection insurance uses the services of a specialist to ensure they get the most appropriate cover for their needs.
Photo Credit: Derek Gavey
Category: Business and Politics
