The importance of staying protected
Coronavirus is having a huge impact on all of our lives and, it goes without saying, that this must be a very unsettling time for everyone. Not surprisingly, we've received a number of queries from our clients in relation to protection cover and claims which I have made every effort to provide answers to in the following Q&A section.
Am I still covered?
Providing you have paid your monthly premiums with your insurer, the cover we arranged remains in place and the terms of it are unaffected by the Coronavirus outbreak. If you have missed any recent payments, give us a call and we’ll do what we can to get you protected again.
If you have cancelled your policy in the recent weeks, it may be possible to have the policy re-instated. The exact terms for re-instatement vary by insurer, so please get in touch and we'll explore what is possible.
Can I take a premium holiday?
At the moment, insurers are not offering this same facility as lenders are doing - allowing you to defer premium payments. However, I am a member of the Openwork advisory network and they are currently in discussions with the major insurers on this issue. So it's possible that the position may change, but there is no guarantee that it will.
If you are in a position where you are worried about being able to afford your premiums, then please get in touch with us as soon as you can so that we can explore what options may be available to you. I cannot, however, stress enough that whatever you do, you should keep your existing plan(s) in place and take advice before taking any further steps!
For obvious reasons, now is NOT the right time to be without cover. Cancelling your policy, with the expectation of reinstating it in a few months’ time when your income position is more stable, not only leaves you without cover at this critical time but would also mean you need to go through medical underwriting all over again. It is possible that insurer terms and conditions will also be tightened up in future, so you could also end up with an inferior policy to the one you currently have.
Will my insurer pay out if I die from Coronavirus?
The good news is that the vast majority of people who catch the virus go on to make a full recovery. If you were to die, then assuming the medical information you provided at the inception of the policy was correct, then the answer would be yes. Your insurer would, however, need to go through their normal claims process to confirm the claim is valid.
Will my insurer pay out for Critical Illness if I get Coronavirus?
Coronavirus is not a specified illness on Critical Illness policies and the view from most insurers is that the virus is unlikely to produce the permanent symptoms or impact on lung function required to meet the definitions evident on policies.
As stated above, the evidence from around the world is that the vast majority of people recover fully from the virus, therefore it is not an on-going critical illness. If you were unfortunate enough to die, then you would be covered. Insurers will, however, assess individual cases on their merit and will always seek to be fair in their assessment.
Will my insurer pay out on my Income Protection policy if I cannot work as a result of Coronavirus?
If the definition of disability is met as a consequence of the Coronavirus, or its impact on underlying or existing conditions, then we would expect the income protection claim to be paid. Most policies do have deferred periods (i.e. a period, usually 1, 3 or 6 months) before which a payment is made.
Will the redundancy cover in my Mortgage Payment Protection policy pay out if I cannot work as a result of Coronavirus?
We would expect that any claims for unemployment will be paid for existing customers. However, temporary or voluntary redundancy or a reduction in working hours by your current employer, is unlikely to be covered.
Can I take out a new policy or increase my Cover?
If you're looking to take out cover or increase your cover levels, please do make contact at the earliest opportunity. Many insurers are tightening their medical underwriting to reflect the additional risk associated with the Coronavirus. However, all the insurers we deal with are still accepting new life, critical illness and income protection cases.
It is also worth pointing out that many existing policies will also allow cover levels to be increased without the need for additional underwriting.
The insurers we recommend have been carefully selected because we believe they are the very best in the UK market. Included in our assessment is the proportion of claims they pay out every year – which for all the insurers I recommend is very high. You can, therefore, be confident that they would deal with all claims fairly and pay all valid claims.
Can I also remind you of the Support Services available on many protection policies, including in many cases remote access to GP services. Please refer to your policy booklet to check exactly what services you have and how to access them.
I know that for many people these are worrying and uncertain times, so I hope that the information I've provided here is helpful and may answer at least some, if not all of the queries and concerns you may have. However, if it raises any additional questions or you are still worried, then please don't hesitate to get in touch with me on 01642 432555.
Sandmartin Financial Advisers
Payment Protection Insurance / Short Term Income Protection Insurance
The plan will have no cash in value at any time, and will cease at the end of the term. If premiums are not maintained, then cover will lapse.
Payment Protection Insurance and Short Term Income Protection Insurance can provide a monthly income to help cover your regular outgoings if you can’t work due to an accident, illness/injury or, often as an optional extra, unemployment.
There are important differences between these products, and long-term Income Protection Insurance. They include a limit on how long the replacement income will be paid for – usually between 12 and 24 months. By contrast, Income Protection Insurance will pay out for as long as you are unable to work (up to the policy expiry).
Unemployment cover is often an optional extra on these policies, or can be purchased as standalone cover.
Payment Protection Insurance is optional. There are other providers of Payment Protection Insurance and other products designed to protect you against the loss of income. For impartial information about insurance, please visit the website at www.moneyadviceservice.org.uk