The Income Protection Task Force (IPTF) has produced a new guide to help advisers with self-employed clients through the duration of their IP policy to make the most of their policy and ensure a smooth claims process if the need arises.
It is in no-one’s interest for people to find out at time of claim that they are not going to receive their full benefit.
Equally no-one wants the claim process to be elongated while financial information is sourced or completed.
These delays cause frustration and confusion that can be actively avoided with some proactive management of the IP policy and financials throughout the lifetime of the policy.
The short guide aims to give simple, practical tips to enable advisers to help ensure the process goes swiftly and smoothly for self-employed and small business policyholders. We hope you find it useful.
The purpose of insurers conducting financial assessments at claim stage is to provide the policyholder with the appropriate level of cover for the financial loss and avoid over insurance and overselling.
In so doing the insurer reduces anti-selection and fraud and ensures premium prices remain low for future policy holders.
The “dos and don’ts” highlighted in the guide are summarised below:
Do
- Ensure that you are worth the cover you require at application. Discuss your options with your adviser in conjunction with your previous three years of income
- Familiarise yourself with the terms and conditions of the protection product you intend to purchase prior to application. Be comfortable with the requirements in the event of a claim
- Check your level cover annually with your adviser to ensure it continues to support your earnings
- Complete an annual tax return
- Submit annual company accounts
- Provide detailed invoices for services including a detailed break down of costs (e.g. time spent, labour per hour and material)
- Keep copies of pay slips and/or CIS statements (four to six months minimum is recommended)
Don’t
- Assume that the cover you purchased at the time will cover you at the time of claim, circumstances change and business fluctuates, however your insurer will always seek to take a fair approach to your financial assessment
- Provide bank statements alone
- Provide invoices without details
- Provide an incomplete or out of date tax summary
- Provide documents that don’t meet the minimum standards of the Companies Act.
The guide also includes two case studies to show the impact that delayed financial reports can have a claim and the reality that financial assessment can have to reduce a claim payment where evidence is not available to support the benefit amount.
The full report is available here.