How To Get Disability Income Insurance In The United Kingdom

Transcription

1 DISABILITY INCOME INSURANCE This booklet applies to a Member of SuperLife who wants to take out disability income insurance, or to extend the disability income insurance benefit provided by their employer. MAY 2015

2 Who provides the insurance? The insurance benefit is fully insured by SuperLife with a life insurance company. The current insurer is Fidelity Life. What is disability income insurance? Disability insurance is often called salary continuance, income protection or income replacement insurance. It pays you a regular income if you can t work as a result of being temporarily disabled. You need to decide: How much the income will be; How long you have to be temporarily disabled before the income starts; How long the income is paid while you are disabled. What does temporarily disability mean? To be temporarily disabled, you must have been off work continuously due to illness or injury. Generally that means you must have medical evidence to prove that you can t work in the job for which you were employed (in a position for which you are reasonably qualified through education, training or experience), but that you are likely to recover and return to work in the future. The insurer decides whether or not you qualify. Advantages through SuperLife What if I have insurance elsewhere? If you have income protection insurance elsewhere, you may not need more insurance. However, you should look at the cost of your existing private insurance. If SuperLife s rates are cheaper, you could think about replacing the insurance you already have. Alternatively, SuperLife s insurance may be more flexible and better suited to your needs. Subject to the medical requirements, you can tailor your cover to meet your changing needs. Premiums are paid by payroll deduction under the rules set by your employer, or from your bank account or from your savings accounts as applicable. Are there restrictions on the insurance amount? The maximum disability insurance cover you can take out is a tax-free income equal to 55% of your before tax, annual pay. The minimum cover is $5,200 p.a., tax-free. Between these levels, you can choose how much you need. The income, if it starts, will have deducted from it any ACC, Worker s Compensation, social security payments or similar payments. It will also have deducted any other disability income benefit you receive. The Trustee has an overseeing role to ensure that the insurance is competitive and the insurer performs. If the insurance is through your employer s arrangements, you can normally continue your insurance when you leave your employer. The legal stuff This is not an investment statement for the purpose of the Securities Act An investment statement is IT S available YOUR from LIFE; SuperLife MAKE IT A free SUPERLIFE. of charge. 01

3 What are the main choices? How much (the benefit level )? First you must decide how much a month you want if you are off work. The more you want, the more it costs. Note that the benefit is payable tax-free. When does it start (the waiting period )? You must next choose how long you have to wait after you get sick before your benefit starts. The longer you wait, the less it costs. The choices are 1, 3 or 6 months. When does it stop (the benefit period )? Lastly, you must choose how long you want the benefit to be paid while you are disabled after it starts. The longer you want it paid, the more it costs. The choices are 2 years, 5 years, or until age 65. Is the disability income taxable? No. Under present law, there is no duty or tax payable on the disability income benefit you receive. Do I have to provide medical evidence? Yes and no. If you are an employee of an employer that participates in SuperLife and you take out disability income insurance cover when you are first eligible, you can take out cover, or increase your other disability income insurance cover under SuperLife up to the medical-free cover level (see later), without medical evidence. This is subject to your answers to the health questions on the application form. First eligible means within two months of first joining an employer who makes SuperLife available to its employees. If you take out voluntary insurance so that your total SuperLife insurance is more than the medical free cover, or if you take it out after you are first eligible, or you are not an employee of an employer that participates in SuperLife, you will have to provide medical evidence. Initially, you will be asked to complete a personal health statement for the insurer. Depending on the answers to the questions, the cover level and when you apply, you may then be asked to Employee Members Spouse/partner Members Medical-free cover level (tax- free) $35,000 p.a. $25,000 p.a. supply further medical evidence. You will be contacted in these cases. If you are required to have a medical examination, the insurer meets the doctor s cost that time. What are the medical free cover levels? The current medical free cover levels depend on the type of member you are. You can have higher cover, with appropriate medical evidence. 02

4 How much does the cover cost? If you take out disability income insurance cover, you pay the cost of the premium and any administration fee - it is deducted from your pay or from your bank account as appropriate. The premium for the disability income insurance will depend on: your age, sex, health, job (and associated health risks) how long you wait before the benefit starts (the waiting period) how long you want the benefit to be payable (the benefit period) how much income you want to receive (the benefit level). The SuperLife insurance booklet includes the current annual premiums for each $1,000 per annum of income cover. These assume that you are in good health. The insurer will decide whether the standard premium needs to be changed for you at the time of your application, based on the answers to the health questions and any other medical evidence received. Once the insurer has reviewed your application, you will be advised of the premium for the first year. You may cancel your application at that time if you decide you don t want the cover. In addition to the base insurance premiums, there is an administration fee of $33 a year. No one at SuperLife receives a commission from your SuperLife insurance. How will my job change the cost? The type of job you do affects the cost. There are four types of job categories. Group A: office workers - examples include accountant, architect, accounts clerk, buyer, clerical worker, computer programmer or operator and receptionist. Group B: travellers and technicians - examples include auctioneer, lab assistant, computer technician, typist and shop assistant. Group C: light manual, trades, retail - examples include builder, supply merchant, carpenter, electrician, livestock buyer, timber merchant and wool buyer/classer. Group D: heavy manual, hazards - examples include boilermaker, floor surfacer, security guard, stonemason and welder. You may not see your own job in the examples. The insurer decides which group it fits into - your employer will say what you do on your application form and the insurer will make the final decision. How do I pay the premiums? If payable by payroll deduction, the premiums are payable weekly, fortnightly or monthly, depending on how often you are paid. They are deducted directly from your pay by your employer and paid to SuperLife. In some cases, they will be paid by direct debit from your 03

5 bank account, or you will be able to pay them from your SuperLife savings account, depending on the rules with your employer. Where payment by deduction from the employer is not available, payment may be made by bank direct debit. Will the premium change? Yes. The premium is based on your age and your job, and will change as you or your spouse/partner get older and will also change if your job changes. The premium will also change if the insurer revises its premium rates. SuperLife s premium review date is each 1 April. You will be advised as at each 1 April what the premium for your insurance will be for the next year. Part of the Trustee s job is to make sure the insurer stays as competitive as possible. However, in the end, you must decide what level of benefits you want for what you are prepared to pay. When will the cover start? The premiums and cover start when confirmed by SuperLife. Can I increase my cover? Yes. You can increase your insurance cover under SuperLife without giving any medical evidence: by up to 30% each year, as long as the increased total insurance cover under SuperLife is less than the medical free cover level. if the extra insurance is taken out within one month after your marriage, or after the birth of a child, and the total increased insurance cover under SuperLife is not more than the medical free cover level. You can increase your insurance cover in all other circumstances, with appropriate medical evidence. Can I stop my cover? Yes. You can stop your voluntary disability income insurance at any time by advising SuperLife. Can I continue my cover if I leave my employer? Yes. If you leave your employer, you can continue some or all of your SuperLife cover. You will need to arrange for the premium and administration fee to be paid from your bank account by direct debit. SuperLife will give you details at the time that you leave. 04

6 Does the income go up with the cost of living? Yes. After your disability income benefit starts, the insurer will increase the amount each year in line with increases in the cost of living (the Consumer s Price Index is used for this). The most that the disability income will go up in a year is 5%. How do I apply? You can apply at any time for voluntary disability income insurance for you or your spouse/partner. To apply, you need to read the SuperLife investment statement, complete the Life and/or disability insurance application form and return the form to SuperLife. Separate forms apply for you and your spouse/partner. 05

7 Important note The insurance cover is provided through SuperLife, SuperLife is a registered superannuation scheme. SuperLife fully insures the benefit you choose with a life insurer. It is extremely important for you to answer the questions on the application form and the personal statement fully and truthfully and to give any extra information that the insurer wants. If you are off work because of illness or injury and the insurer does not give the money to SuperLife because of information you gave (or did not give) on your application form or for any other reason, SuperLife will not have the money to pay out the benefit. In that case, you will not get the money you thought you would. superlife@superlife.co.nz Charlotte Street, Eden Terrace, Auckland 1021 PO Box 8811, Symonds Street, Auckland 1150