Income protection jargon buster

Needless jargon is pretty much a way of life today and is literally found everywhere. Instruction manuals tend to be among the worst/repeat (alternative vocabulary) offenders, as the words and phrases they often use to describe how to operate something is beyond comprehension. Way beyond. In a different universe most of the time.

Then there’s business speak, which continues to confound critics with its new-fangled and futile ways in which to say something relatively rudimentary when stripped back to basics.

And what about teenagers? When was the last time you foolishly attempted to communicate with an average teenager, and moreover with the misguidedly ambitious view of extracting some information from them? Don’t bother, would be our advice, as they speak in tongues!

Thankfully all is not lost in income protection insurance terminology, as you’re about to discover for yourself with our quick run-down of the most popular and frequented words and phrases trotted out by insurance companies offering this hugely important policy; and variations on the same theme.

We’ve tried to afford people looking to take out an income protection insurance policy a more simplistic understanding of the turns of phraseology implemented and commonplace in this field, although obviously stopping some way short of compiling a patronising dummies guide.

To cut a oxymoronic long story short, we instead give you our Income Protection Insurance Jargon Buster!

A

ABI (Association of British Insurers, the) – Although not classed as a regulatory body as such, the ABI nevertheless acts as the collective voice for many insurance providing companies here in the UK, of whom membership is in the hundreds.

Activities of Daily Living – Washing, cooking, cleaning and even walking are included amongst the range of daily self-care activities cited as the pre-determined qualifying criteria for those income protection insurance claimants who declare that they can’t perform the aforementioned due to being deemed incapacitated.

Age-related Policy – This is in relation to specific income protection insurance which focus on a policyholder’s age. This is of particular relevance as it’s commonly acknowledged that the younger the would-be policyholder, the more competitively priced the insurance product tends to be, whilst conversely the older you are the more expensive they become, generally-speaking.

Any Occupation Cover – This refers explicitly to instances whereby the policyholder/claimant is considered to be so severely incapacitated (due to illness or injury) that they can no longer undertake any kind of remunerated work whatsoever.

ASU (Accident, Sickness and Unemployment) – When it’s proven beyond reasonable doubt that an income protection insurance policyholder/claimant cannot carry out their normal employment duties/remit as a direct result of illness, injury or involuntary redundancy, Accident, Sickness and Unemployment insurance plans can be triggered; which essentially provides the policyholder with a tax-free monthly benefit of up to 70% (on average) of their gross salary.

B

Back to Day One – This phrase is of relevance to income protection insurance policyholders who subsequently make a claim on their plans, and who have specifically chosen to implement a ‘Back to Day One’ cover as part of the original agreement, signed between both parties from the outset. Ostensibly this will allow the claimant to backdate any payments due/owed to the first day you declare as being unable to work.

Benefit – Should a claim filed against a policyholder’s income protection insurance plan be successful, then they will be entitled – as per their contractual agreement – to a benefit in the form of a pre-determined financial settlement.

Broker – Otherwise known as intermediaries, brokers are not to put too finer point on it a middle-person who acts as a representative of an insurance company with a remit of finding clients/would-be policyholders for its insurance product portfolio. Not governed by the number of insurance-providing companies they represent, brokers frequently act as a go-between for both insurers and policy buyers.

C

Claim – In accordance with mutually satisfying the terms and conditions signed up to with your income protection insurance policy provider, a claim is lodged – along with notification requesting your monthly benefit – with said company if and when illness/injury/involuntary redundancies strikes at any time during the term of the policy.

D

Deferred Period – The exact passage of time between when the policyholder files a claim with their income protection insurance provider and when it’s agreed to start paying out in recognition of the pre-agreed terms and conditions.

E

Exclusion – This relates to special clauses listed in the income protection insurance plan which deems NOT to pay-out for incapacity claims resultant from the onset of certain medical conditions or injuries sustained by the participation in specific pastimes or activities which themselves were cited at the application stages.

G

Guaranteed Policy – Pertaining to the financial consistency of previously agreed monthly payments during the complete income protection insurance policy lifecycle, this constitutes that it would only ever increase in monetary value if and when the policyholder opts to revise their cover level upwards.

I

Incapacity – In other words the unforeseen manifestation of a medical and/or health-compromising condition brought about as a recognised by-product of either sickness, an accident or injury which is deemed to hamper the policyholder’s physical ability to carry out the duties indicative of their normal employment, or any similar kind of role.

Income – The sum of money which the income protection insurance policyholder habitually pockets for fulfilling the remit of their normal occupational role.

Income Protection Plan – A precise type of bespoke insurance product which recompenses the insured by way of fiscal benefits paid over a pre-agreed period (and when all qualifying criteria is met and approved), in the direct event of them being incapacitated due to the unpredicted onset of illness, accident or injury experienced.

Insurance – This is a legally-binding arrangement which is ratified by both an insurance-providing company and a proposer, which when instigated by the policyholder seeks to recompense the claimant for a specified shortfall in income in exchange for the on-going meeting of payments for a pre-determined premium.

L

Long-term Income Protection – This refers to the universally accepted income protection insurance product which – when claimed and subsequently sanctioned by the provider – will pay the policyholder a tax-free monthly benefit in the event of illness or sickness, until such time as the claimant is in a position to resume their employment or reaches recognized retirement age in the UK.

M

Material Fact – This is all about potential income protection insurance policyholder declaring anything and everything which might typically influence the insurance provider’s ultimate decision, of whether or not to offer the individual a plan tailored to their requirements. The failure to disclose any material facts which may or may not affect the eventual policy particulars proffered, could render an existing policy null and void in the future at worst, or at the very least compromise the paying out of any claims made against said policy.

Medical Conditions – In a nutshell any illnesses, sickness, health conditions or medical diseases from which a would-be policyholder may suffer from.

O

Occupation (or alternatively profession, career, job, etc) – What the income protection insurance policyholder does for a living/historically makes a living from.

Occupation Class – Deriving from the considered risks habitually associated with it – in the eyes of the insurance industry, per se – occupation class routinely refers to the related classification in which the policyholder’s job title will fall into from the beginning of any policy negotiations or subsequent offer of cover.

Own Occupation Cover – Should an income protection insurance policyholder find themselves in a physical position whereby they can’t undertake the tasks ordinarily required of them – and determined by the very definition of their own occupation specifics – own occupation cover is activated and becomes payable by the insurer.

P

Policy – The contract which is drawn-up and rubber stamped by the insurer and in collaboration with the new policyholder, which amongst other features will detail the circumstances by which the income protection insurance provider will pay-out.

Policy Term – This references the period of agreed time in which an income protection insurance policyholder’s cover will remain active – and ergo provide cover over – on the proviso that the premium is paid until such time as the term is complete.

Premium – The monetary sum in which is paid by the policyholder on a monthly basis for the continued cover offered by the income protection insurance plan. This premium can alternatively be paid in one lump sum at the outset of the term.

R

Reviewable Policy – This points to income protection insurance policy premiums which are subject to periodic reviews (as ordained by both the insurance provider and policyholder), and often carried out as regularly as once every 12 months.

S

Short-term Income Protection – With a maximum pay-out period normally set at 12 months, this is a specifically defined and constituted income protection insurance policy which offers those who qualify a tax-free replacement of earnings otherwise lost as a direct result of illness, injury or involuntary redundancy.

Statutory Sick Pay – Regarding the payment clause which is triggered when employees are unable to work for more than 4 days consecutively as a result of incapacity, whereby employers are then obliged by law to compensate for loss of earnings (percentage-based) for a maximum period of 28 weeks.

Suited Occupation Cover–  Despite it not necessarily being the occupation in which they are qualified and/or experienced, a suited occupation cover in income protection insurance policy parlance is that which defines an occupation for which the insured party may be suited, irrespective of it not being referred to as ‘own occupation’.

U

Underwriter – Employed by an income protection insurance policy provider, an underwriter is an individual who essentially deliberates on the risk – and therefore subsequent acceptance – associated with a would-be policyholder’s application for policy/insurance product. If agreed to in principle then the underwriter’s additional role is to calculate the premium rates.