ProtectionMar 15 2012

Claiming for cover

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ByNicola Culley

A protection topic so hot at the moment you could burn your hands on it, is own occupation income protection policies against any occupation.

Some say it should be an own occupation-only world. Others say while work task definitions are problematic, advice and understanding was ultimately to blame, not the products. Either way, income protection has received a fair amount of bad press lately and most have agreed it is a sector that can do without the negative attention.

When you take an income protection policy there are varying methods around how an insurance company will assess your ability to work when you claim.

Generally speaking, with occupation-only, if you cannot do the specified occupation, there should rarely be problems claiming. For the any occupation, things get a little murky.

A policyholder may need to prove functional ability under work task definitions. This can sometimes include proving such things as inability to climb stairs or read words on a computer screen, so making a claim can be less straightforward. Then there is suited occupation. To claim, you must not only prove you cannot function in your own occupation, but any suited occupation that your education, training and experience relates to.

For example, a case study from Friends Life in its incapacity definitions for group income protection used the example of a male paint technician for a car manufacturer who had fractured his arm. Suggested related occupations were a vehicle parts operative, an electronics assembler or stock controller or stores assistant.

To reach this conclusion Friends Life will go through a transferable skills analysis.

The factsheet stated: “A TSA involves a detailed review of the claimant’s work history, education and training, and medical file to identify occupations that utilise their skills while taking into account any reduction in function due to illness or injury.”

But the definition of suited occupation will vary from provider to provider - and like the open definition of any occupation, herein lies the main point of concern.

Around half of income protection providers continue to use the definition, particularly for high-level occupations.

Andy Couchman, co-chairman of the Protection Review, said IFAs should only be selling own occupation and suited occupation.

“It is very clear. If a person cannot do his job and cannot be in work then he can claim and get enough income until he goes back to work,” he said.

“This and suited are very close. The problem is the rest of it and work tasks definitions. It looks at functional abilities and you would have to be in a pretty bad way to tick some of the boxes to claim.”