Must-haves for disability income protection

Transcription

1 Must-haves for disability income protection CHOOSING AN INCOME PROTECTION PRODUCT FOR DISABILITY? Ask yourself: Will my claim get paid and how much will I receive? Can I get cover that matches 100% of my needs? Can I change my cover at a later stage without further underwriting? For more information, contact or visit Insured by Guardrisk Life Ltd FSP 76. is an authorised Financial Services Provider. FSP 2717.

2 Assessing an income protection product for disability? has the answers! Must-haves for disability income protection With the diversity of available income protection products, it can be easy to lose sight of the real reason for income protection to protect your ability to earn an income when you are injured or ill and unable to work. Whatever your choice of product, you need to be sure that when it comes time to claim, you will be paid, that you are able to get cover that matches 100% of your needs, and that you have the flexibility to change your cover if you need to Will my claim get paid and how much will I receive? Can I get cover that matches 100% of my needs? Can I change my cover or benefits at a later stage without further underwriting? - Specialist experience in occupational disability assessment. - The most comprehensive claim criteria in the market. - Partial claims assessed on either percentage disabled or loss of income basis you choose. - We don't reduce pay-outs by other income earned in the first year of claim and don't require proof of loss of income which means the highest possible pay-out. - You have a greater chance of having your claim paid with than with any other insurer! - Cover 100% of your income on an own occupation definition from day 1 till the day you would have retired. - No claims boosters required, just your full income covered from day 1. - Cover on multiple waiting periods and benefit terms. - Ability to split cover across different waiting periods which no other insurer will allow you to do. - Cover that matches your needs! - Increase cover by more than with any other insurer and with far fewer restrictions. - Decrease cover and then re-instate or increase it again without medical underwriting. - Cover that can be changed to meet changing needs!

3 01 Will my claim get paid and how much will I receive? 01a WILL MY CLAIM GET PAID? You have a greater chance of having your claim paid with us than with any other insurer. With extensive experience assessing income protection claims on an occupational disability basis, understands the real issues behind most claims and we do everything we can to get claims paid as quickly and completely as possible. For partial claims, we allow a choice of a percentage disabled or loss of income based payment to allow you the biggest possible pay-out. We have also developed additional claim criteria to fast track claim payments for some standard conditions, with little assessment and few questions asked. After the initial claim periods, if you re still unable to return to work we will utilise our extensive claims experience to further assess your claim on an occupational disability basis and continue payment if required. Our certainty lies in our experience and expertise we are specialists in assessing income protection risk and we assess claims in a way that no other insurer is able to do. Occupational disability An insurer can have multiple claims definitions but without experience in assessing claims on occupational disability, these definitions mean nothing. Before you compare insurers on their number of claims criteria, you should first evaluate their ability to assess claims under occupational disability because that is the criterion that you are most likely to claim on. This is how most claims are assessed. At, we have more experience than anyone else in assessing income protection claims on an occupational disability basis. For more information, contact or visit Insured by Guardrisk Life Ltd FSP 76. is an authorised Financial Services Provider. FSP I page 1

4 Partial claims get the highest possible pay-out OR % Disabled Loss of Income You choose! Most insurers assess claims on either a percentage disabled or loss of income basis, or they don t give you the choice. Some insurers use both assessment methods but don t clarify whether the assessment which has the highest pay-out is the one that will be used. Assessed on percentage disabled? With, if you return to work and find your loss of income is actually greater than you thought it would be, you can still switch to claim on a loss of income basis up to 30 days after the claim has closed, and get paid the difference. The choice is yours! CASE Study Bryan the Plumber Fall resulting in dislocated shoulder. No manual work for 3 months. TIP Cover: R per month Average earnings: R per month 50% manual I 50% admin Paid on a % Disabled Basis Paid on a Loss of Income Basis 50% disabled, so no income earned Paid = R Can t do manual work so no income earned Paid = R In this case, s loss of income option means a bigger pay-out for Bryan (R as opposed to R60 000). There are examples where a percentage disabled approach results in a higher claim pay-out. Loss of income can be an onerous requirement at claim stage or your loss might only occur after you have returned to work. By allowing you to choose the basis on which your claim is assessed, ensures that you are not adversely affected when you are still partially able to work. APPENDIX TABLE 1 COMPETITOR SUMMARY OF PARTIAL OCCUPATIONAL DISABILITY CRITERIA 01 I page 2

5 Understanding s claim criteria s multiple claim criteria are unmatched in the market because they are developed based on our extensive claims experience and income protection expertise. This reduces the subjectivity of the assessment process, speeding up payment and ensuring you receive the highest possible pay-out. Guaranteed sickness Fast Track Guaranteed minimum period Childbirth Claim If you still cannot work, then claim will be assessed on occupational disability. Occupational disability Note: Driver s extension applies on occupational disability claims. Partial disability Loss of Income You choose highest pay-out. Functional impairment % Disabled Fast track If after initial claim period you are still unable to work you can still claim under occupational disability. Occupational disability Guaranteed minimum period Guaranteed sickness payment Childbirth benefit Full occupational disability Partial disability Functional impairment % disabled Loss of income Driver s extension If you have one of the fractures in the Fractures table, you will be paid out your full benefit amount for the duration set out in the Fractures table. If you have a doctor s note that books you off work for at least 7 days, you will be paid out your full benefit amount for the duration that you are booked off work from day 8 up to a maximum of 14 days. If hospitalised for at least 24 hours continuously, your pay-out will be backdated to day 1. After giving birth, female policyholders may claim for a once-off lump sum equal to 12 times their total monthly premium, if their policy has been in force for at least 9 months. Allows you to claim if you have an injury or an illness that prevents you from working. You can choose to be paid out based on the percentage of your job that you cannot do. You can choose to be paid out based on the amount of income that you have lost over the claim period. This option is available for up to 30 days after the end of the claim. Claim R250 a day towards a driver if through disability you are unable to drive but are otherwise able to perform your occupation. If you have a permanent condition listed in the Functional impairment table, you will be paid based on the severity of your impairment and the corresponding percentage pay-out for that severity level. APPENDIX TABLE 2 COMPETITOR SUMMARY OF PRODUCT CLAIM CRITERIA 01 I page 3

6 01b How much will I receive? Receiving the correct claim pay-out is essential because the cover amount you select is the amount you believe you will need at claims stage. Aggregation Aggregation and proof of loss of income are standard industry processes and can put you at a significant disadvantage as they may reduce the amount you are paid. Aggregation rules allow insurance providers to reduce claim amounts against income earned from work or other disability benefits. This is a massive risk as the claim amount might end up being less than the cover paid for and less than you expected. Aggregation reduces claim amounts. For example, if you're self-employed, you might receive an income while you are disabled for work performed before you were disabled. But, you might struggle to get back to your pre-disability earnings immediately on your return to work. Aggregation of these variable earnings could cause you to end up with less than you were covered for in the long run. will never aggregate a temporary claim pay-out against income earned from working. And after the first 12 months of any temporary claim, will then only aggregate against payments made by another insurer. Proof of Loss of Income Proof of loss of income entails proving your income and the amount lost during the disability period. If you have a variable income or are self-employed not only is this an administratively onerous and difficult task at claim stage, your pay-out amount could be seriously affected. Proof of loss of income can reduce claim amounts. We don't ask for proof of loss of income which means you get paid what you need when you need it. 01 I page 4

7 CASE Study Siya the Adviser Injuries as the result of a car accident. Unable to work for 12 months. TIP Cover: R per month Average earnings pre-disability: R per month - R primary commission (new policies) - R secondary commission (policies sold 12 months prior) Claiming with Earnings post-disability: - 1st month: R primary commission (policies sold just before accident) - Entire disability: R per month secondary commission (policies sold 12 months before accident) Claiming with Competitor R per month TOTAL PAID over 12 months: R Payments exceed pre-disability earnings but when Siya returns to work it will take a year for his earnings to return to the same level as before. AGGREGATION from day 1 1st month: R Rest of months: R TOTAL PAID over 12 months: R Siya will only earn R per month for the first year back at work, because he will not earn any secondary commission. With no aggregation, Siya receives enough for both the period while he can t work and the period when he returns to work but his income has not recovered yet. The approach recognises that policies that aggregate against income earned while disabled can leave a gap in cover on return to work. APPENDIX TABLE 3 - COMPETITOR SUMMARY OF AGGREGATION RULES APPENDIX TABLE 4 COMPETITOR SUMMARY OF PROOF OF LOSS OF INCOME RULES 01 I page 5

8 02 Can I get cover that matches 100% of my needs? If you need your full income every month to live then insuring anything less than 100% from the day earnings stop until the day you would have retired is just not enough. Covers 100% of your earnings Allows you to split cover across multiple waiting periods Income protection is actually a simple product it allows you to insure your income against the risk that you are unable to work. If your policy is only protecting a portion of your income, then it is only doing part of what it should. 100% of income from day 1 until retirement. Most competitors offer 100% cover of income on temporary income protection benefits for the first 24 months of disability. However, after 24 months payments are usually limited to 75% of income. Could you survive with only 75% of your income? covers 100% of income* for the first 24 months on a temporary disability basis and, beyond 24 months until retirement age, 100% of income on an extended disability basis. This ensures you are 100% covered from day 1 until the day you would have retired. * defines after-tax monthly income as the sum of monthly Guaranteed Salary, Non-Guaranteed Salary, and the Life Insured's Share of Profits. CASE Study Justin the Plumber Hijack victim. Disabled at 45. Retirement age: 65. EIP Cover: R per month with annual increases Average earnings: R per month (with annual increases) Total expected future earnings: R14.4 million (based on current earnings allowing for annual inflationary linked increases between age 45 and 65) Claiming with Claiming with Competitor Covering 100% of income PAID R14.4 million Covering 75% of income PAID R11 million A total difference of R3.4 million! For more information, contact or visit Insured by Guardrisk Life Ltd FSP 76. is an authorised Financial Services Provider. FSP I page 1

9 Claim boosters aren't always the answer Some competitors offer claim boosters to cover this gap, increasing the claim amount after the fi rst 24 months BUT if you are permanently disabled at the highest severity level. Boosters are not guaranteed to apply to all claims that run beyond 24 months. And, remember, proving functional impairment is far more onerous than proving occupational disability. So claims boosters are not guaranteed. Research shows that 83% of claims that run longer than 24 months would not qualify for a claim booster. EXAMPLES of claims that could run longer than 24 months and not qualify: The Skin Organic brain disorders Mental and behavioural disorders visual disorders Neurological impairment of respiration Damage to your skin can have serious effects on your ability to work. In order to qualify for the booster you must burn the palms of both hands or suffer third degree burns that cover more than 30% of your total body surface area. An organic brain disorder can prevent you from working for years before you would qualify as functionally impaired, and even then you may not be eligible for the claim booster e.g. Alzheimer s, epilepsy, and meningitis. Psychological conditions by their nature do not often fi t into a standard Functional Impairment table. Furthermore, psychological conditions can prevent you from working for years before you would qualify for the claim booster e.g. Bipolar disorder, schizophrenia, depressive disorders, and obsessive compulsive disorders. Any visual disorder which leaves your vision substantially impaired can result in you being unable to work making occupational based criteria easy to meet. In order to qualify for the claim booster for visual disorders, you need to be completely blind. Anything less than complete loss of sight would not warrant payment under the claim booster. Any respiration impairment which was neurologically caused will only qualify for the claim booster if you have no capacity for spontaneous breathing and rely completely on ventilation. This includes the requirement that you need to be permanently confi ned to a bed. have no need for claim boosters because you can select cover equal to 100% of your income. APPENDIX TABLE 5 COMPETITOR SUMMARY OF MAXIMUM AMOUNTS ALLOWABLE ON DIFFERENT PRODUCTS Cover should be flexible enough to meet individual needs It is essential to cover your entire income BUT also important to have fl exibility in how your cover is made up so that the cover you choose fi ts your needs. Unlike many other insurers, allows you to choose waiting periods and benefi t terms that match your needs so you get paid out when you need it most. 82% of 's temporary claims last less than 90 days. Split of claim duration up to 90 days has four WAITING PERIODS for temporary disability cover: 7 days (benefi ts paid retrospectively back to day 1, for self-employed individuals, professionals, commission earners, and contract workers) 14 days (not offered by most competitors) 30 days 90 days 44% 14% 15% 27% Temporary disability cover (with a short waiting period) is a must as we know most temporary disability claims last less than 90 days. With you can decide which waiting period best suits your needs. With you can split cover across waiting periods (NOT the case with most insurers). 14 days or less 15 to 30 days 31 to 60 days 61 to 90 days 02 I page 2

10 offers a 14 day waiting period. This is not offered by most insurers but can be a valuable option for working individuals: - Non-self-employed / non-professional individuals can t get cover on a 7 day waiting period but, with, they can choose a 14 day waiting period. Most insurers offer 30 days as shortest waiting period (depending on sick leave to cover the gap) but most people don t have a full sick leave balance of 30 days so there is still a gap that needs to be covered. - For individuals who are not self-employed, but earn a combination of a basic salary and commission, allows the commission portion of earnings on a 7 day waiting period and basic salary on a 14 day waiting period. Most insurers would force all cover on a 30 day waiting period. CASE Study Andre the Business Owner Needs cover from day one. TIP Cover: R per month. Waiting Period: 7 days Average earnings: R per month Premium: R Cover split over waiting periods: R Waiting Period 7 days R Waiting Period 14 days R Waiting Period 30 days Premium: R Difference in monthly premium: R77.27 With, splitting cover over waiting periods means cover that matches different needs and a cheaper premium. has four BENEFIT TERMS for temporary disability cover: 3 months 6 months 12 months 24 months Most insurers only offer a 24 month benefit term for temporary disability. A large number of employees have PHI benefits with a waiting period of 3 or 6 months which makes temporary income protection cover with a benefit term of 3 or 6 months a perfect fit for the shortfall. Insurers who only offer 24 month benefit term options cannot provide benefits that fill this gap appropriately. Most insurers only offer a 24 month benefit term. APPENDIX TABLE 6 COMPETITOR SUMMARY OF WAITING PERIODS AND BENEFIT TERMS 02 I page 3

11 You should be able to have cover beyond traditional retirement ages Think income is only important while you re working? What about after your retirement? Or what if you decide to work past the traditional retirement age on your policy? How will you cover that income? You need a product that recognises the risks you face as you reach and exceed your traditional retirement age, as well as when you end up working longer than anticipated. With 's Retirement Extender Option, you could receive up to 75% of your pre-retirement income payable for life, plus temporary income protection cover if you work past age 70. Ask yourself: 1. Can I claim for temporary disabilities after age 70? 2. If I am in claim at age 70, can my claim continue on a functional impairment basis? 3. How much cover will I have on a functional impairment basis after age 70? 's Retirement Extender means that at application stage, policyholders that have the Temporary Income Protector benefit can add the Temporary Income Protector 75 (TIP 75) benefit while policyholders with the Extended Income Protector benefit can add the Long-term Care Protector benefit. At application stage for TIP, if you select Retirement Extender as your cease age, you will have access to TIP 75. At application stage for EIP, if you select Retirement Extender as your cease age, you will have access to Long-term. TIP 75 Provided you are working past age 70, this cover pays you a monthly income if you cannot work in your own occupation due to a temporary accident or illness up until the age of 75. Long-term Care Protector If you are 70 or have retired, this cover pays you a monthly income for life if you are functionally impaired. APPENDIX TABLE 7 COMPETITOR SUMMARY OF COVER BEYOND AGE 70 APPENDIX TABLE 8 COMPETITOR SUMMARY OF COVER BEYOND AGE 70 It's also important to think about the possibility that when taking out cover you assumed an incorrect policy retirement age. What if you end up working longer than you thought when you took out your cover? You're going to need to extend your policy to make sure you continue to have cover for as long as you work. With 's Continuation Option you have the option of extending your policy retirement age by 5 years on slightly different terms. You can exercise this option more than once and you can extend it right up to age 70. Research shows more individuals are working past the traditional retirement age of 70.

12 03 Can I change my cover or benefits at a later stage without further underwriting? Life changes and so should your cover. However, increasing your cover under strict terms might put you at risk, especially if you have to undergo underwriting every time you do so. A future insurability guarantee allows changes to cover levels without further underwriting. Some insurers offer future insurability guarantees that allow for once-off or annual increases, but these are often subject to tight eligibility rules and may not apply if the client has claimed before. boasts the strongest future insurability guarantee on the market. And, it doesn't fall away if our clients claim or were not accepted at standard rates. Once we ve accepted an individual for cover, they can SUSPEND, REDUCE, AND INCREASE their cover as their needs change, all without additional medical underwriting. This ensures that cover remains in line with your needs as your circumstances change over time. Overview of Benefit Increase Options Annual Benefit Increase All insurers have an option which allows you to automatically increase your benefit amount by a fixed percentage each year without medical underwriting to meet gradual inflationary increases to income. s Annual Benefit Increase allows annual increase of 0%, 5%, 7.5%, or 10% (selected at policy commencement). Other Benefit Increase Options Some insurers allow an increase in cover over and above the annual fixed increase without medical underwriting on policy anniversary. However, there are significant differences between these options buried in the fine print. Most competitors offer detailed and restrictive options for increasing cover. Often, clients with a health loading or a prior claim are excluded which excludes those most likely to need the option. Also, the older you are, the more likely you are to need the option to avoid your new cover being underwritten, so it s important to note the maximum age to which you can exercise the option. At, we allow you to increase your cover beyond the annual benefit increase even if you ve claimed before or have a health loading. This means you can continue to match cover and income without exposure to the risk of additional underwriting. Annual Review Option means that if you are under the age of 35, you can increase your cover by up to 20% and up to the lesser of CPI x 2 and 20% if aged 35 to 55. APPENDIX TABLE 7 COMPETITOR SUMMARY OF INCREASES ON POLICY ANNIVERSARY, USING ANNUAL REVIEW INCREASE OPTIONS For more information, contact or visit Insured by Guardrisk Life Ltd FSP 76. is an authorised Financial Services Provider. FSP I page 1

13 Other Options from Freeze Benefit Freeze policy for either 3 or 6 months after the first 12 months of the policy. No premiums or cover for that time but, upon reinstatement, all benefits and premiums remain the same and no underwriting is required. Continuation Benefit When reaching cease age, extend selected disability benefits for a 5 year period on specified terms. Change in Circumstances Benefit Increase cover by up to 25% without underwriting on beneficiary's death, divorce, marriage, childbirth, adoption, or purchasing a property. Reinstatement Benefit Reduce cover on policy anniversary and then re-instate cover at the next policy anniversary without underwriting. Future Income Protector Increase cover by up to 300% without underwriting during certain periods, depending on your age at application. CASE Study Taryn the Financial Adviser Asthma health loading. Wants to increase cover by 5% per year to make up difference between annual earnings increase and selected annual benefit increase. TIP Cover: R per month Average earnings: R per month Annual Earning Increases: average 15% Annual Benefit Increase selected: 10% Other Product Providers Annual benefit increase Plus, a 20% increase at each policy anniversary until age 35 and thereafter by the lesser of CPI x 2 and 20% Ability to keep cover levels in line with income despite loading Annual benefit increase only Excluded from other Benefit Increase options Requires underwriting for any increase Increase may be rejected 03 I page 2

14 CASE Study Nick the Accountant Business earnings decrease to R Wants to decrease cover to match earnings but, if business improves, wants to be able to increase cover again. TIP Cover: R per month Average earnings: R per month Other Product Providers Can decrease cover to any level or even freeze it for a time When business improves, can increase cover without underwriting May require underwriting for any increase Increase may be rejected CASE Study James the Lawyer Low replacement ratio. James get married and wants to increase his cover. TIP Cover: R per month Average earnings: R per month Other Product Providers Change in Circumstances benefit allows a 25% increase without having to be underwritten Can increase his cover again using this option when he has a child or if/when his spouse dies Requires underwriting for any increase Increase may be rejected if his health has deteriorated since he originally took out cover Loadings may apply APPENDIX TABLE 8 COMPETITOR SUMMARY OF THE RULES AROUND EACH PRODUCT OFFERING APPENDIX TABLE 9 COMPETITOR SUMMARY OF DIFFERENT OPTIONS TO INCREASE COVER WITHOUT UNDERWRITING 03 I page 3