Income protection cover is designed to protect you and your dependents in the event that you are unable to work due to a serious illness or accident. Hollard Life’s Head of Product & Technical Business, Ryan Chegwidden, explains how there are various insurance options available and how the differences in the benefits they offer should be fully understood before determining the one that best suits your individual circumstances.
The prospect of suffering a life-changing injury or illness is a frightening one for all of us and there’s no question that it makes sense to take cover against the risk of being unable to provide financially for ourselves and our families. But, thanks to insurance jargon and technical policy wordings, there’s confusion about the benefits of Disability and Impairment policies and it’s really important to be clear on the different levels of protection they provide before you sign on the dotted line.
Understanding the difference
To start with, we need to understand the distinction the insurance industry makes between a ‘disability’ and an ‘impairment’, as this is where the wires most often get crossed.
A ‘disability’ is an injury or illness that results in an individual being unable to earn an income from their existing job.
An ‘impairment’ is an injury or illness that results in a physical or functional disorder and the individuals existing job is not relevant.
Both can be equally serious and life-changing, and the effects may either be temporary or permanent, but the difference lies in the extent to which they compromise the individual’s ability to perform their workplace responsibilities.
Say a computer programmer loses their sight due to an accident or illness, their eye condition will prevent them from doing their job and they will be unable to earn an income as a computer programmer, so that will meet the criteria for a ‘disability’. The loss of sight would also meet the criteria for an ‘impairment’.
However, if the same programmer loses the use of their leg due to, say, a car accident, although the injury is profound, they would still be able to do their job because no physical agility is required to sit in front of a computer. So, in that case, while the person would be ‘impaired’ by their injury, their capacity to continue to earning an income from their existing job means this would not be classified as a ‘disability’.
Should this programmer suffer from a mental condition however, it is possible that this won’t meet the criteria for an ‘impairment’, but could be considered a ‘disability’.
Choosing the right cover
Once people understand these differences, they typically want a comprehensive product that covers both Disability and Impairment. However, it comes at a cost that may not always fit comfortably into a family’s budget. Added to which, a pre-existing health condition or a dangerous and highly physical occupation (such as construction work, where insurers regard the risk of disability too great) mean they may not qualify for Disability cover. This is where an Impairment cover – which is not based on occupation and a pre-existing health status may be an acceptable risk – comes in.
The world of work is changing and, based on these two core offerings, there are income protection products out there for every circumstance. It’s just a question of finding the one that meets your own unique set of requirements.
At Hollard, our approach is to deliver holistic insurance solutions and benefits that meet our clients’ diverse needs, so there’s no need to spend life worrying about the ‘what-ifs’, even if life does change in a heartbeat.