Income Protection Policies and COVID-19

Income Protection cover is designed to pay a regular benefit in the event that you are unable to work and suffer a loss of income due to illness, accident, or injury. The cover can either be arranged so that it lasts until your intended retirement, or runs for a shorter period of up to two years.

This helps you to maintain your living expenses in such an event and many Lloyd & Whyte clients will have this vital type of cover in place.

If you have an existing Income Protection policy in place, insurers will cover you if you are diagnosed with COVID-19 and meet the definition of disability after the normal deferred period on your policy which in most cases will be 4-13 weeks, but sometimes longer.

Terms do vary between insurers, but many have made changes so that the deferred period will start from the beginning of self-isolation, should a policyholder receive a positive COVID-19 diagnosis and be unable to work.

As self-isolation is typically 14 days, or in some cases 28 days, then in most cases this will fall within the deferred period on your policy and so it will not be possible to claim for self-isolation without a positive diagnosis.

Click here to understand the stance of specific providers.

Some policyholders may have Income Protection which offers cover from the very first day of incapacity or with a shorter deferred period, usually via a Friendly Society, and these providers may consider claims for medically advised self-isolation, which aligns with current NHS 111 or Government guidance.

Ultimately claims procedures and terms will differ between insurers and so it will be important to check the terms on your particular policy and we can help with this process if your policy was purchased via your Lloyd & Whyte adviser.

It is not clear as to how the 80% of salary pledge will interact with employer sick pay arrangements, but in any event where there is continuing income from your employer, an insurer will not pay the benefit.

Individuals who have an Income Protection cover benefit which exceeds the £2,500 monthly cap, are likely to be able to claim the difference up to their policy maximum benefit level.

As we write this, news is coming through about the financial support available for the self-employed, but this will need further examination to understand the how this will work.

We have recently seen an increase in enquiries from our association partner members, as has the whole of the insurance industry. For new Income Protection applications, the insurers are excluding COVID-19.