This can be particularly problematic for contractors and freelancers if they had an unusually quiet month just before becoming unwell.
Put simply, they might not get as much cover as they thought they would.
That doesn’t have to be the case. Some insurers now offer the opportunity to fix the level of cover at point of application, meaning there’ll be no nasty surprises when your client is most at need.
Again, it’s about providing peace of mind for clients by letting them know that insurers will be there for them even when they are at their most vulnerable.
3. Occupational hazards
It’s always important to note the employment definition of any insurer's policies and bear this in mind when recommending products to your clients.
In some cases, policies may only cover clients until they are able to return to any type of paid employment, regardless of what form that takes.
This is clearly an emotive issue for many people considering income protection – they will want to return to their job, not simply any job.
It’s particularly true of labour intensive roles like manufacturing and construction, which might take more time to return to.
There is a plethora of solutions on offer, but the key focus should always be on locating a robust income protection policy, one which should cover them until they are well enough to return to their own job, regardless of their occupation.
4. Race against time: paying out on illness claims
Many policies have a minimum deferred period, which is usually in line with the government’s definition of ‘long-term illness’ at four weeks.
While that’s financially manageable for some people, it is simply not realistic for everyone.
So that raises the question: if your client had to wait four weeks with only limited funds before they can start claiming their income protection cover, will they still be able to meet all their pre-existing financial commitments?
If not, it’s worth considering a policy which has cover much sooner, or even from day one.
Alternatively, a client with a rainy-day fund at hand might prefer to extend their deferred period in order to reduce the monthly premium.
5. Keeping options open: spotlight on limited claim periods
Traditionally, income protection has been sold on a long-term basis, which allows claims to be paid right up until the client’s retirement age.
But insurers are increasingly offering limited claim periods of one, two or five years, which can dramatically reduce premium costs.
While limited claim periods provide less comprehensive cover, clients can still have multiple claims for different illnesses or injuries.
