Income Protection Plan
Friends Provident's Income Protection Plan is designed to pay a regular income benefit if the insured suffers illness or accidental injury and is unable to work, leading to loss of earnings.
Maximum age at attained at entry
54
Maximum annual benefit available
The weekly equivalent of:
n 70% of the first £10,000 a year of pre-incapacity earnings; plus
n 60% of the next £20,000 a year of pre-incapacity earnings; plus
n 50% of the next £120,000 a year of pre-incapacity earnings; plus
n 40% of pre-incapacity earnings over £150,000 a year.
This is subject to a maximum benefit of £3,000 a week.
Minimum policy term
Five years, and 13 years if the policy includes increasable insurance option.
Termination at age 50 available
Retirement can be between 50 and 65.
Monthly policy fee
£3 a month, or £30 a year (£2 a month, £20 a year for split plans).
Increase the retirement age after start date - other than guaranteed insurability option (GIO)
May be increased, subject to underwriting.
Decrease term after start date
May be decreased, no underwriting required.
Increase benefit subject to underwriting
Yes
Decrease benefit subject to underwriting
Yes
GIOs available
May effect further policies of this type based on the life insured. Available at the 3rd, 6th, 9th, 12th, 15th and 18th anniversaries of the effective date, but no option is available within 10 years of the policy's expiry date. The relevant application form must be received no later than 30 days after the date on which the option was available. This option is subject to the following:
n The income protection (IP) benefit under any further policy effected as a result of exercise of this option should not exceed 30% of that shown in the policy schedule;
n The deferred period may not be shorter than that applying to the policy;
n The expiry date may not be later than the expiry date under the policy;
n The new policy should be issued without the insured having to submit further evidence of insurability, subject to the terms and conditions applicable to that policy and which are appropriate to the age of the insured at the time it is effected;
n Any new policy may not include this option or any other option to increase benefits or effect further policies, but increasing cover may be included only if in this policy;
n If a new policy is effected under this option
(i) during a period of incapacity lasting a week or more;
(ii) within a period of six months after the termination of such a period; or
(iii) while a rehabilitation benefit is in course of payment,
then no period of incapacity will be recognised under the new policy for the purpose of generating a claim until after the insured has recovered and has been in full-time employment for six months.
Maximum age to exercise GIO
54
Plan available without indexation
Level income - benefit and premiums remain level throughout. Provided the life assured remains in good health, they can increase the level of income benefit by taking out more policies, subject to underwriting.
Benefit amount index linked
Increasing cover plan - the level of income insured rises each year. It automatically increases by 5% a year compound to offset rising prices; regardless of any changes to the insured's state of health. Premium payments will also rise at the same rate. This allows the insured to effect a new policy every three years for the first 15 years of the plan, without the need for further evidence of insurability as long as it is for an amount of benefit not exceeding 30% of that under the original plan. The option is available with all three types of cover. If a new policy is effected under the option during a period of disability lasting a week or more, or within six months of the end of a period of incapacity or while rehabilitation benefit is being paid, no benefit will be paid under the new policy until the insured has completed six months active full-time employment. If a new policy is not effected at an option date, entitlement to further policies is not affected although increases may not be carried forward. Additional policies effected do not contain further increase options.
Age used when costing indexation increases
Depends on age at outset of the life assured.
Waiver of premium available
Any premium due during a period of payment of IP benefit, rehabilitation benefit or housepersons' benefit will be waived.
Career break available
If the insured ceases full-time employment, the plan allows them to replace their IP cover with the housepersons' benefit without further evidence of health. The duration depends on the end of the term the insured chooses. Within five years, they can restore the IP cover without supplying further evidence of health.
Maximum housepersons' benefit
£300 a week or £15,600 a year.
Deferred period applicable to housepersons' benefit
Periods of four, 13, 26 or 52 weeks.
n Occupation class - Class 1.
Proportionate benefit available
Yes
Rehabilitation benefit available
Yes
Relapse benefit available
If a further period of incapacity or period of housepersons' incapacity commences:
n Within 52 weeks of the termination of a previous period during which IP benefit, housepersons' benefit or proportionate benefit was payable;
n During a period of entitlement to rehabilitation benefit, and the further period arises from the same cause as the previous period, then the periods will be linked. This means that the first period will be regarded as having continued throughout for all purposes other than for determining pre-incapacity earnings, and there will be no entitlement to benefit in respect of days between periods.
Hospitalisation benefit available
If the insured is confined to hospital for more than seven days during the deferred period, the benefit will then be payable from, and including, the eighth complete day of confinement up to and including the earliest of
n The last complete day of confinement to hospital;
n The 91st complete day of confinement to hospital;
n The date of expiry of the deferred period;
n The date of death of the insured;
n The policy expiry date.
The amount of benefit will be one-seventh of the IP benefit or housepersons' benefit specified in the policy schedule for each complete day of confinement to hospital, but subject to a maximum benefit of £150 a day or a higher amount decided at Friends Provident's discretion.
This figure will apply as an overall maximum to this policy, and to any similar policies simultaneously or subsequently issued.
Disability counsellors used
Yes
Maximum percentage of income insurable
n 70% of the first £10,000 a year of pre-incapacity earning; plus
n 60% of the next £20,000 a year of pre-incapacity earnings; plus
n 50% of the next £40,000 a year of pre-incapacity earning; plus
n 40% of pre-incapacity earning in excess of £70,000 a year; and
n Divided by 52.
Standard definition of disability
Own occupation means a period throughout which the insured is totally unable because of illness or accidental injury to perform the material and substantial duties of their employment and is not engaged in a remunerative occupation.
Definition of disability linked to activities of daily living
Applies to housepersons and those working less than an average of 16 hours a week.
Two deferred periods in one plan
Available where a person has more than one job or a tiered sick pay arrangement, so that two or more plans are effected with different deferred periods at the same time, the minimum premium and plan charge are reduced to £5 a month and £2 a month, respectively.
Number of exclusions applying to the plan
None
