Common income protection insurance exclusions

August 21, 2015

Life’s full of exceptions and exclusions as, after all, we can’t just expect to do whatever we want, whenever we choose, willy-nilly, as that’s just not cricket. We should fully expect to be reined in and curtailed with certain things now and again and just take the presenting of these unwritten rules on the chin and get on with it.

Insurance is one such instance where barriers have to be put up so as to draw a line in the sand between what you can expect to do and those things you can’t. Rather than just being a spoil sport there is more often than not a degree of methodology applied to this perceived obstinateness; primarily to protect policyholders’ best interests and insurance providers’ assets.

Income protection insurance is no exception, although it is. Or rather, has exceptions implied as part of the policy T’s & C’s, if you follow the ambiguity of that last sentence. The last time we looked, we noted a number of high profile anomalies which you’d do well to acknowledge and subsequently consider before agreeing to sign up to the various types of this specialist insurance product.

As we’ve already accepted there has to be some limitations governing aspects of our lives, otherwise society would be quickly dismantled and a sort of apocalyptical Mad Max scenario would take hold.

Thankfully the world of income protection insurance is one such industry which readily brandishes stipulations which need to be adhered to, the most prominent of which are…

Pre-existing illness and/or injury

If you admit to (and we urge you to disclose ALL previous medical conditions when applying for income protection insurance) having any pre-existing health issues that might have led to you not being able to hold down a job for a significant passage of time, it’s fair to say that you will be declined income protection by some insurance providers.

And those that do agree to it will do so on the proviso that you stump up a more sizeable premium than if you’ve had a clean bill of health prior.

Of those that do recompense the policyholder in the event of a future claim being lodged, will only do so if you can prove that you have had no problems with the condition for a specific period of time before it flared up again.

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Incidentally, it’s more than probable that a would-be policyholder could be refused cover if the income protection provider can demonstrate that the insured party was withholding knowledge about a specific medical issue which recurs during the term of the policy.

Chronic condition

The definition of a ‘chronic condition’ in the eyes of income protection insurers can include any of the following descriptions: a medical/health condition which continues indefinitely, or is constant (albeit controlled rather than cured), or it bears symptoms which are recurrent and required consultation, treatment or care in the past, or which necessitates long-term monitoring or treatment, consultations, check-ups, examinations or tests.

Unemployment exclusions

This typically extends to cover a multitude of sub-headings, comprising the likes of (prior knowledge of) impending redundancy and the confirmation of self-employed/subcontractor/casual or seasonal worker/employed by a member of your family/contract worker status.

If the insured party is found to have had any hand in effectively making themselves unemployed, income protection insurance cover will cease to apply.

Having said that, the unemployment/redundancy section of such a policy may be a waste of money for the self-employed as this accepted demographic cannot make themselves unemployed or redundant.

For the most part income protection insurance policies will insist that the proposer has enjoyed continuous employment for a pre-determined period before losing their job or receiving notice of any redundancy.

In real terms this is perhaps better explained as insurance exclusions and limitations applying if the would-be policyholder had only been in employment for three months, which might well contravene the often stipulated six month threshold passing prior to which any claim payments would be triggered.

What’s more, if an income protection insurance provider deems that the policyholder jeopardises/loses their role through their own fault – for example being sacked for misconduct – then they will be declined any benefits associated with the package, as it’s pretty much set in stone that to satisfy income protection criteria the insured party would have needed to have lost their occupation through no fault of their own.

Therefore this rules out resignations and the taking of voluntary redundancies.

Elsewhere and the other common exclusion sections on the majority of income protection insurance plans routinely include;

  • Disability due to, or caused by, HIV/AIDS
  • Normal pregnancy and childbirth
  • War
  • Self-inflicted injury
  • Criminal acts
  • Misuse of alcohol or drugs
  • Failure to follow medical advice
  • Residing outside of the UK

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