For customers Income protection the facts

Transcription

1 For customers Icome protectio the facts We ve desiged this documet to give you more iformatio about our icome protectio beefits. It does t form part of ay cotract betwee you ad/or us. This iformatio refers to our product terms as at 18 May The full terms ad coditios of the cotract are i the policy coditios. Your policy schedule will show the terms ad coditios that apply specifically to you.

2 Other documets you should read Persoal Protectio or Busiess Protectio key features These provide a summary of the beefits ad optios available uder our Persoal ad Busiess Protectio meus. Persoal Protectio or Busiess Protectio policy coditios These provide details of the terms ad coditios that apply to your Persoal or Busiess Protectio policy. Defiitios guide This gives you a explaatio of the defiitios we ll use ad the evidece we ll eed to assess ay claim you make. It will also give you full details of the stadard exclusios that may apply to your policy. You ca get a copy of all these documets from the Support sectio of our website at aego.co.uk or from your fiacial adviser. Cotets Icome protectio the facts What s icome protectio? 03 How does icome protectio work? 04 What s the maximum beefit amout we ca pay? 05 What happes if my earigs have dropped by the time I claim? 06 What do we mea by taxable eared icome? 07 Whe will the icome protectio paymets start? 07 How log ca icome protectio paymets last ad how log will we pay your claim? 08 How will we assess your icome protectio claim? 09 Ca I claim agai after returig to work? 09 Ca the isured perso retur to part-time or less well-paid work? Rehabilitatio beefit Proportioate beefit 10 Additioal support to help recovery 10 Premium paymets while claimig 10 What other icome may reduce what we pay you? 11 If the isured perso takes a career break ca the icome protectio cotiue? 12 I ve recetly become uemployed ca the icome protectio cotiue? 12 Maximum ad miimum age ad term 12 Claims requiremets 13 What about tax? Idividual icome protectio Key perso icome protectio Executive icome protectio 14 How to cotact us

3 Icome protectio the facts 03 What you eed to kow about our icome protectio beefit What s icome protectio? Icome protectio is available as a mai beefit uder our Persoal ad Busiess protectio meus. It s available o a sigle-life basis oly. There are three optios: Idividual icome protectio available uder our Persoal Protectio meu. This pays the isured perso a mothly beefit amout after the deferred period, if due to accidet or sickess they re still uable to work, resultig i a loss of earigs or et profit. There are three defiitios of icapacity for this beefit: ow occupatio, ay suited occupatio or activities of daily work. Depedig o the isured perso s circumstaces, we may oly be able to offer the ay suited occupatio or activities of daily work defiitios. We ll let you ad the isured perso kow which defiitio they ca have. Key perso icome protectio available uder our Busiess Protectio meu. This pays the policyholder a mothly beefit amout after the deferred period, if due to accidet or sickess the isured perso is still uable to work. This beefit ca be used to either help pay for a replacemet employee or to help cover the loss of profits. There are two defiitios of icapacity available for this beefit: ow occupatio ad ay suited occupatio. Depedig o the circumstaces, we may oly be able to offer the ay suited occupatio defiitio. We ll let you kow which defiitio the isured perso ca have whe you apply for the policy. Executive icome protectio available uder our Busiess Protectio meu. This pays the policyholder a mothly beefit amout after the deferred period, if due to accidet or sickess the isured perso is still uable to work resultig i a loss of earigs. This allows you to isure the taxable eared icome of valued employees. This beefit must be used to help pay replacemet taxable eared icome to the employee while they re off work ad will be paid through the PAYE (Pay As You Ear) system. There are three defiitios of icapacity for this beefit: ow occupatio, ay suited occupatio or activities of daily work. Depedig o the circumstaces, we may oly be able to offer the ay suited occupatio or activities of daily work defiitio. We ll let you kow which defiitio the isured perso ca have whe you apply for the policy. You ca fid more iformatio o our defiitios of icapacity i our Defiitios guide.

4 Icome protectio the facts 04 How does icome protectio work? You decide how much beefit you eed, the beefit term ad whe you eed icome paymets to start. If a accidet or sickess stops the isured perso from workig, you must let us kow the details as soo as possible but o later tha show i the table below. If you do t tell us withi these time limits, it may affect the decisio o the claim ad could delay paymet of the beefit amout. Deferred period Notificatio period 4 or 8 weeks by week 2 13 weeks by week 4 26 weeks by week 6 52 weeks by week 12 We ll pay a mothly beefit amout after the ed of the deferred period, if we agree your claim. You ca fid details o the deferred period i the Whe will the icome protectio paymets start? sectio of this guide. We ll make the first paymet oe moth after the ed of the deferred period ad will cotiue makig paymets for as log as the isured perso meets the defiitio of icapacity as show o your policy schedule (or ay subsequet chages) ad subject to the coditios i the How log ca icome protectio paymets last ad how log will we pay your claim? sectio of this guide. Waiver of premium beefit is automatically icluded with all icome protectio beefits ad will cover paymet of your premiums while we re payig your icome protectio beefit. We wo t pay waiver of premium beefit while we re payig proportioate or rehabilitatio beefit. What s the maximum beefit amout we ca pay? Whe choosig the beefit amout you eed, you should remember that the maximum amout we ca allow is: Idividual icome protectio the lower of 55% of the isured persos total earigs ad 150,000 a year. The actual amout of beefit we ll pay if you make a claim will be based o your pre-icapacity earigs. We limit the amout of the beefit because tax ad Natioal Isurace (NI) cotributios are deducted from your ormal earigs but ot from the beefit amout we ll pay you. Key perso icome protectio you select the amout of beefit suitable at the start, based o oe of the followig maximum beefit calculatios (up to a maximum of 250,000 a year): 2.5 times the isured perso s icome averaged over the last three years, or 75% of the compay s average gross profits that ca be attributed to the key employee over the last three years Executive icome protectio the maximum beefit calculatio will be: 75% of the employee s pre-icapacity taxable eared icome (up to a maximum of 130,000 a year) plus the yearly cotributio towards the isured perso s pesio made i the previous 12 moths by the compay plus employer NI cotributios (which ca also be protected by the employer up to the amout paid for the isured perso i the last 12 moths) The combied overall limit for pesio ad NI cotributios is 30,000. Ad the total executive icome protectio cover available is 160,000 a year.

5 Icome protectio the facts 05 What happes if my earigs have dropped by the time I claim? Idividual icome protectio We kow your icome ca vary over the term of your policy. That s why we offer a icome promise to help protect you agaist a drop i your icome after your policy has started. If you re still receivig a icome durig your claim, we ll take that icome ito accout ad deduct it from the beefit amout. If you take out cover of up to 1,500 a moth, we ll make sure the icome you receive while claimig is equal to the isured amout, up to a maximum of 1,500. For example, if you re isured for 900 a moth, we ll pay you 900, less ay cotiuig icome ad ot recalculate 55% of pre-disability icome. If you re isured for more tha 1,500, we ll make sure your icome durig claim is equal to at least 1,500 a moth, less ay cotiuig icome. To qualify, the isured perso must work a miimum of 16 hours a week (self-employed) or 24 hours a week (employed) whe they make a claim. The icome promise does t apply to housepersos or those takig a career break. We ll also eed to cofirm the taxable eared icome stated at the time you applied for cover was correct. Example Kare s icome before becomig ill was 24,000 a year. She has idividual icome protectio which gives her a mothly beefit amout of 1,200. She has o cotiuig icome, for example sick pay. So Kare s allowable beefit is ( 24,000 x 0.55)/12 = 1,100. So although Kare s allowable beefit is 1,100, our icome promise meas we ll pay her 1,200. Now let s assume Kare had cotiuig icome of 200 a moth sick pay. Although our icome promise meas we d pay her 1,200, we still eed to deduct ay cotiuig icome from this figure. So assumig she receives 200 a moth sick pay, we d pay her 1,000 a moth util her sick pay fiishes. We kow there are a umber of reasos why your icome might reduce before you make a claim. That s why, if your isured beefit is over 1,500 a moth, we ll offer a fiacial cushio. As metioed before, the most we ca pay out is 55% of the isured perso s yearly taxable eared icome. We the take off other icome they may be receivig, such as icome that cotiues to be payable to them durig their period of icapacity, beefits uder ay other icome protectio or ill health/accidet policies they may have or pesio beefits payable.

6 Icome protectio the facts 06 However, if after we ve take off the other icome, the maximum amout we could pay is withi 10% of the isured amout, we ll pay the amout you re isured for i full. Example Steve ears 40,000 a year. He has idividual icome protectio which gives him a mothly beefit amout of 1,833. Three years after takig out his icome protectio cover, Steve s salary reduces to 38,000 a year. The followig year, Steve becomes sick ad is t able to work. First we eed to determie the maximum amout we ca pay Steve: 55% of 38,000 = 20,900 a year or 1, a moth The we deduct ay other icome he s receivig (i this case, Steve does t have ay other icome): 1, = 1, a moth Fially we check this is t more tha Steve was covered for origially 1,833 a moth. The differece betwee the maximum amout we could pay ow ( 1,741.67) ad what he was origially covered for ( 1,833) is withi 10% of his isured amout. As the differece is 5%, we ll pay him the 1,833. Key perso icome protectio We do t recalculate the beefit amout at claim stage so we wo t reduce the beefit amout. However, we ll eed evidece to cofirm the compay is sufferig a loss of icome due to the absece of the isured perso. Executive icome protectio Ay paymet will be based o the isured perso s curret earigs. See the What other icome may reduce what we pay you? sectio of this guide for details. What do we mea by taxable eared icome? We mea icome that will be lost i the evet of icapacity. This could iclude regular icome such as salary, commissio, bouses ad overtime (as log as the isured perso ca prove that this has formed part of their ormal salary over the last three years) ad P11D beefits which would be lost i the evet of icapacity. Idividual icome protectio If the isured perso is employed, their pre-icapacity taxable eared icome is their gross taxable earigs averaged over the last 12 moths before they became icapacitated. If they re self-employed, their pre-icapacity taxable eared icome is the et profit from their occupatio averaged over the last three years before they became icapacitated, as assessed for icome tax ad as show o a agreed tax retur provided by HM Reveue & Customs.

7 Icome protectio the facts 07 If the isured perso is a compay director of their ow busiess, ad they re also a shareholder their pre-icapacity taxable eared icome meas the salary ad divideds received from the profit geerated after deductio of corporatio tax i the 12 moths before a claim. If the isured perso is a houseperso or ot i paid employmet the maximum amout of beefit we ca pay out is 1,250 a moth. Key perso icome protectio ad executive icome protectio Icome for a compay director of their ow busiess, who is also a shareholder, meas the salary ad divideds received from the profit geerated after deductio of corporatio tax i the 12 moths before a claim. Please also see the What other icome may reduce what we pay you? sectio of this guide. Whe will the icome protectio paymets start? Whe the isured perso is first uable to work due to accidet or sickess there will be a period, kow as the deferred period, whe we do t pay out ay beefit. For idividual icome protectio ad executive icome protectio you ca choose a deferred period of 4, 8, 13, 26 or 52 weeks. For key perso icome protectio, you ca choose a deferred period of 13, 26 or 52 weeks. The miimum deferred period available for houseperso s beefit is 13 weeks. How log ca icome protectio paymets last ad how log will we pay your claim? Whe you take out the icome protectio beefit, you ca choose how log you wat the cover to last by choosig either a beefit term or the age you wat the beefit to stop. For idividual icome protectio, this must be o later tha your plaed retiremet date or your 70th birthday, if sooer. There may also be additioal restrictios o the beefit term available for certai occupatios. We ll pay icome protectio beefit paymets util the earliest of: Idividual icome protectio the ed of the beefit term (this may be restricted for certai occupatios) the death of the isured perso the isured perso o loger meetig the defiitio of icapacity as show o your policy schedule the isured perso o loger sufferig a loss of earigs Key perso icome protectio the ed of the beefit term (this may be restricted for certai occupatios). The maximum beefit term available for key perso icome protectio is 10 years the death of the isured perso the isured perso o loger meetig the defiitio of icapacity as show o your policy schedule the ed of the beefit paymet period the date the isured perso s employmet with the compay eds the date the compay stops tradig

8 Icome protectio the facts 08 We ll pay key perso icome protectio for a set period of time withi the beefit term, kow as a paymet period. You must choose the paymet period of oe, two, three, four or five years at the start. Executive icome protectio the ed of the beefit term (this may be restricted for certai occupatios) the death of the isured perso the isured perso o loger meetig the defiitio of icapacity as show o your policy schedule the isured perso o loger sufferig a loss of earigs the date the isured perso s employmet with the compay eds If you have executive icome protectio cover ad the compay stops tradig we ll cotiue to pay the beefit to the isured perso, subject to the coditios above. If this happes, the meaig of icome will be restricted ad will ot iclude pesio or NI cotributios. If the beefit is t i paymet, the executive icome protectio cover will ed. Your icome protectio cover wo t ed whe your claim eds if the beefit term has t eded ad, for key perso icome protectio, the paymet period has t eded. You ca claim as may times as you eed to. However, to make sure your cover cotiues whe your claim eds, you have to start payig premiums agai. How will we assess your icome protectio claim? There are three defiitios of icapacity for idividual icome protectio ad executive icome protectio. These are ow occupatio, ay suited occupatio or activities of daily work. There are two defiitios of icapacity for key perso icome protectio. These are ow occupatio or ay suited occupatio. Your policy schedule will show you which oe applies at the start of your policy. You ca fid full details of the icapacity defiitios i our Defiitios guide. We may eed to chage the defiitio of icapacity if you become uemployed, take a career break or have houseperso s beefit. If the defiitio of icapacity is ow occupatio or ay suited occupatio, we ll assess ay claim made o the isured perso s occupatio immediately before their icapacity started. We ll also ask for evidece of the isured perso s loss of earigs/et profit or the compay s loss of profit. You ll qualify for icome protectio beefit paymets if the isured perso satisfies the defiitio of icapacity resultig i a loss of earigs/et profit or loss of profit. If the isured perso is uemployed or has bee made redudat i the last 12 moths before claimig, we ll treat the claim as if they were i full employmet. If the isured perso is t i paid employmet at (ad has bee uemployed for more tha 12 moths before) the time of claim, we ll use the activities of daily work defiitio of icapacity to assess your

9 Icome protectio the facts 09 claim ad limit the maximum amout we pay you to 1,250 a moth. The deferred period will be icreased to 13 weeks for beefits which had a four- or eight-week deferred period. I all cases we ll ask for medical evidece, for example a cosultat s report, a idepedet medical examiatio or a home visit by a qualified urse. This list is t exhaustive ad we ll pay ay costs ivolved. Ca I claim agai after returig to work? Yes. There s o limit to the umber of claims you ca make durig the term of your icome protectio beefit. However, you must restart payig premiums whe each claim eds to make sure that your cover cotiues. If you eed to make aother claim for the same coditio or a related coditio withi six moths of your last claim edig ad the isured perso satisfies the defiitio of icapacity, the deferred period wo t apply. For key perso icome protectio, if multiple claims are made, the legth of these claims will be added together ad whe the total legth of the claims matches the legth of the beefit paymet period, we ll stop payig the claim. Ca the isured perso retur to part-time or less well-paid work? Yes. If the isured perso s o loger able to fully carry out their ormal occupatio but retur to work i a reduced role or if they take up differet work at a lower icome, we d support them by cotiuig to pay a mothly beefit amout. This would be at a reduced level depedig o their ew icome. Rehabilitatio beefit available with all icome protectio beefits If the isured perso ca t do their ormal job o the hours they re cotracted to do ad have to go back with fewer duties or workig less hours, we could pay a reduced beefit. We ll work out the amout of beefit payable i the same way as proportioate beefit. Proportioate beefit available with idividual icome protectio ad executive icome protectio If the isured perso s o loger able to carry out their ormal occupatio but they take up differet work at a lower icome with the same compay, we d support them by cotiuig to pay a mothly beefit amout at a reduced level depedet o their ew icome. You must let us kow if this happes. After the deferred period, we d pay a reduced beefit based o the calculatio show over the page. You ca claim for proportioate beefit eve if you have t received full beefit. We ll pay it for as log as the isured perso meets the defiitio of icapacity (see the How log ca icome protectio paymets last ad how log will we pay your claim? sectio of this guide). Proportioate beefit is t available if the isured perso has the activities of daily work defiitio of icapacity.

10 Icome protectio the facts 10 Here s how we work out the beefit: Maximum allowable beefit = 10,000* (E) Pre-icapacity eared icome mius New reduced eared icome Divide C by Pre-icapacity eared icome 18,500 (A) 12,000 (B) (A mius B) = 6,500 (C) 6,500 (C) 18,500 (A) = 0.35 (D) Reduced beefit amout is (E x D) 10,000 x 0.35 = 3,500 *Maximum allowable beefit is the lowest of 55% of the gross salary or the isured amout. Please also see the What other icome may reduce what we pay you? sectio of this guide. Additioal support to help recovery We may also offer rehabilitatio support. Where we feel it will beefit the isured perso s retur to work, we ll pay for rehabilitatio experts to help them maage their recovery so they ca resume their ormal lifestyle as soo as possible. The rehabilitatio programme will deped o idividual circumstaces for example, how ill they are ad to what extet their illess leds itself to rehabilitatio. Premium paymets while claimig You should carry o payig premiums util we accept your claim. You do t eed to pay them while we re payig a beefit uder your icome protectio cover. However, you ll eed to start payig premiums if the isured perso starts workig agai, eve if the work is o a part-time basis or they re i a differet occupatio. What other icome may reduce what we pay you? Idividual icome protectio We ll reduce the beefit amout if ay of the followig take the isured perso over the maximum beefit amout we ca allow (see the What s the maximum beefit amout we ca pay uder icome protectio? sectio of this guide): Cotiuig paymets from their employer, such as sick pay Ay ogoig icome from a busiess or compay Pesio paymets uless they d have received them if they were still workig Other isurace beefits if they pay out because of their icapacity ad are paid to the isured perso or to someoe else for them, such as, but ot limited to, mortgage paymets We wo t reduce the beefit amout if they receive: icome support or other meas-tested state beefits, although our paymet may affect their eligibility for meas-tested state beefits ivestmet icome state icapacity beefit

11 Icome protectio the facts 11 Key perso icome protectio We do t recalculate the beefit amout at claim stage so we wo t reduce the beefit amout. We ll eed evidece to cofirm the compay is sufferig a loss of icome due to the absece of the isured perso. Executive icome protectio We ll deduct ay Employmet ad Support Allowace (or a similar beefit if ameded or replaced) to which the isured perso is etitled, ad we ll also reduce the beefit amout if ay of the followig take the isured perso over the maximum beefit amout we ca allow (see the How much beefit ca be paid? sectio of this guide): Cotiuig paymets from their employer (such as sick pay) Ay ogoig icome from a busiess or compay Pesio paymets uless they d have received them if they were still workig Other isurace beefits if they pay out because of the isured perso s icapacity ad are paid to the isured perso or someoe else for them, such as but ot limited to, mortgage paymets We wo t reduce the beefit amout if the isured perso receives: icome support or other meas-tested state beefits, although our paymet may affect their eligibility for meas-tested state beefits ivestmet icome If the isured perso takes a career break ca the icome protectio cotiue? Yes, if you have idividual icome protectio or executive icome protectio. If the isured perso takes a recogised compay career break, the icome protectio ca cotiue. We ll reduce the premium ad the beefit amout, if ecessary, to the maximum houseperso s beefit amout of 1,250 a moth or the curret beefit amout, whichever s lower. There will be a miimum deferred period of 13 weeks with this optio ad the activities of daily work defiitio of icapacity will apply. You must tell us i writig if the isured perso decides to take a career break. If the isured perso goes back to work withi five years of takig the career break, we ll put the beefit amout, premium ad defiitio of icapacity back to the level they were at before. The isured perso wo t have to provide ay more iformatio o the state of their health, as log as their ew earigs justify the level of beefit. If you ve chose the idexatio optio, we ll put the beefit amout back to the amout it would have bee if the isured perso had t take the career break. Where the premium basis is reviewable ad a review falls withi a career break, the review will be based o the curret lower premium ad beefit amout. If we have to reduce your beefit amout, we wo t refud ay of your premium paymets.

12 Icome protectio the facts 12 I ve recetly become uemployed ca the icome protectio cotiue? Yes, if you have idividual icome protectio. If the isured perso is t workig at the date of claim but has bee i work i the previous 12 moths, we ll pay you based o your policy defiitio ad their previous job. You ll receive 12 moths of beefit, after the ed of the deferred period, based o this defiitio. After 12 moths, we ll assess them usig the houseperso s defiitio. If you eed to claim after more tha 12 moths of redudacy or uemploymet, the maximum beefit amout will be 1,250 a moth ad the activities of daily work defiitio will apply. Maximum ad miimum age ad term Beefit Idividual icome protectio Key perso icome protectio Executive icome protectio Age last birthday whe you take out a beefit Beefit term (years) Mi Max Mi Max Maximum age attaied at the ed of the beefit term Claims requiremets You ll oly remai covered for idividual protectio, executive icome protectio or key perso icome protectio while the isured perso s a permaet residet i oe of the home coutries: Uited Kigdom, the Chael Islads or the Isle of Ma. If they travel or live temporarily outside the home coutries for more tha 13 cotiuous weeks i ay 12-moth period the cover for the icome protectio beefits will be excluded. The cover will start agai whe the isured perso has bee back i ay of the home coutries for 39 weeks i a row. If the isured perso travels or lives temporarily i ay oe or more of the followig desigated coutries: Europea Uio (excludig the UK), Adorra, Australia, Gibraltar, Liechtestei, Moaco, Sa Mario, Turkey, the Vatica City State, New Zealad, Caada, Icelad, Norway, Switzerlad, or the Uited States of America the the 13-week period metioed above will be exteded to 26 weeks durig ay 12-moth period. The cover will start agai whe the isured perso has bee back i ay of the desigated coutries for 26 weeks i a row.

13 Icome protectio the facts 13 What about tax? Idividual icome protectio As the premiums are usually paid from your taxed icome, ay beefits received are ormally exempt from tax. Key perso icome protectio The busiess will ormally be etitled to tax relief o the premiums it pays o the policy, provided that: the policy is desiged to compesate for a loss of profits the key perso is a employee as a employee they do t have a sigificat shareholdig, ad the term of the policy does t exted beyod the period of the isured perso s usefuless to the compay. It s geerally recommeded that the beefit term should t be more tha five years If these coditios are t met, the it s ulikely that the busiess will qualify for tax relief o the premiums. Key perso icome protectio beefits will be paid directly to the busiess. They re subject to tax as a tradig receipt if they re used for a reveue purpose. Executive icome protectio Premiums for executive icome protectio will ormally be allowed as a busiess expese if they meet the wholly ad exclusively for the purposes of the busiess test. This meas the expese ca t serve a dual purpose, for example it should t have some busiess ad o-busiess use, with the split betwee the two ot beig readily recogisable. No-busiess related expediture is t tax deductible. As the policy is owed by you as the employer rather tha the employee, the premiums are t treated as a beefit i kid for the employee. Beefits paid from a executive icome protectio policy are paid to you, the employer, ad taxed as a tradig receipt. The beefit passed o to the employee is subject to PAYE ad NI, as it s taxed as eared icome. This should usually be a allowable expese for you the employer. The employee will receive the beefits et of tax ad NI cotributios uder the PAYE system. This iformatio is based o our uderstadig of curret legislatio, taxatio law ad HMRC practice, which may chage.

14 How to cotact us Remember, a fiacial adviser will ormally be your first poit of cotact. We wo t be able to give you ay fiacial advice at ay stage. If you have ay questios, you ca phoe, or write to us at: Protectio Customer Service Cetre Moday to Friday, 8.30am to 5.30pm protect_support@aego.co.uk Aego Ediburgh Park Ediburgh EH12 9SE We may moitor calls to improve our service. If you wat to make a claim, please phoe or us at: Moday to Friday, 8.30am to 5.00pm claims@aego.co.uk Alteratively, please write to our Claims departmet at the address above. As Lead Parter of British Teis, we re helpig to trasform the future of the sport by supportig youg talet, atioal teams ad evets throughout the coutry, icludig the Aego Champioships at The Quee s Club. Fid out more at aegoteis.co.uk Aego is a brad ame of Scottish Equitable plc. Scottish Equitable plc, registered office: Ediburgh Park, Ediburgh EH12 9SE. Registered i Scotlad (No ). Authorised by the Prudetial Regulatio Authority ad regulated by the Fiacial Coduct Authority ad the Prudetial Regulatio Authority. Fiacial Services Register umber A Aego compay Aego UK plc C IP /15