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Activities of Daily Living – a list of non-work related activities that you are likely to carry out each day e.g.

  • Walking – ability to walk 200m on a level surface
  • Climbing – Ability to climb 12 stairs and down again, using a hand rail if necessary
  • Lifting – Ability to lift 2Kg at table height for 1 minute
  • Bending – Ability to bend or kneel and touch the floor and stand back up.
  • Getting in and out of a car – For a standard saloon car
  • Writing – Write legibly using a pen / pencil or type using a keyboard

Activities of Daily Work - a list of work related activities that you are likely to carry out each day e.g.

  • Walking – ability to walk 200m on a level surface
  • Climbing – Ability to climb 12 stairs and down again, using a hand rail if necessary
  • Lifting – Ability to lift 2Kg at table height for 1 minute
  • Bending – Ability to bend or kneel and touch the floor and stand back up.
  • Getting in and out of a car – For a standard saloon car
  • Writing – Write legibly using a pen / pencil or type using a keyboard

Advised – where an insurance policy is taken out through a qualified adviser.

Age Costed Premium – a premium that increases as you age to reflect the rising likelihood of you making a claim.

Allowable Income – an income type that is included in the calculation of your maximum cover limit.

Any Occupation Cover – a policy that will only pay out if you are unable to do any possible occupation.

AS – an abbreviation for accident and sickness cover, an inferior income insurance policy.

ASU – an abbreviation for accident, sickness and unemployment cover.  As above, plus unemployment.

Benefit Period – the maximum length of time that the insurance policy will pay out for.

Deferred Period – the time gap between being unable to work and the policy payments beginning.

Gross Monthly Income – your qualifying monthly income, before any deductions.

Guaranteed Insurability Option – The ability to increase your cover amount without having to go through more underwriting.

Guaranteed Premium – a premium that is fixed for the policy term, other than indexation increases.

Housepersons Cover – Income protection for non-working people, normally on ADL definition.

Indexation – an optional annual cover increase, typically at RPI, to maintain the benefit value.

IP – an abbreviation for Income Protection.

Key Person Income Protection – a policy taken by a business on a key member of staff, paid to the business.

Monthly benefit – the amount of money paid each month in the event of a successful claim.

MPPI – Mortgage Payment Protection Insurance is designed to cover the cost of your mortgage payments in the event that an accident, sickness or unemployment stops you from working. Compared to Income Protection, the policies tend to have significantly more exclusions and are only underwritten at the point of claim, so you will only find out what they will not pay for when you submit a claim!

Non-Advised – This is the term that describes the process of taking out an insurance policy directly through an insurer rather than via an adviser. If a non-advised policy is taken out in error then there is no right of complaint as you have effectively been the adviser.

Over-Insurance – This is where the specified amount of cover shown on the policy is greater than the amount that can be claimed.

Own Occupation Cover – A policy that will pay out if you are unable to carry out your normal work duties due to an accident or illness. It is the ‘Gold Standard’ of Income Protection cover

PHI – Permanent Health Insurance is simply another name for Income Protection Insurance, though this description has largely fallen out of favour over the last ten years.

PPI – Payment Protection Insurance Payment protection insurance is also also known as credit insurance, credit protection insurance, or loan repayment insurance is a policy that enables consumers to insure repayment of loans if the borrower becomes ill, disabled or becomes unemployed. It is a largely discredited type of insurance as it has been miss-sold so frequently by banks and other financial institutions and the pay-out history is questionable.

Reviewable Premium – An insurance premium that can be regularly reviewed by the insurer, most commonly every 5 years but potentially annually. Normally they are lower than guaranteed premiums on an equivalent policy. The premium can be increased or even decreased, depending on a number of factors such as insurer claims history, cost of reinsurance or cancellation rates.

Risk Class – Insurance companies classify occupations into different risk classes depending on how dangerous an activity is. The risk class of an occupation will have a significant impact on the cost of the Income Protection cover and also whether Own Occupation cover is available from some insurers. The majority of insurers use 4 different occupation classes but there are up to 9 classes used by some.

Specific Exclusions – For Income Protection, a specific exclusion is one that is applied to the policy due to the specific background and risk factors of the individual insured.

Standard Exclusions – A standard exclusion is one that is included as part of the policy terms and conditions, regardless of the background of the individual concerned. A common one is Unreasonable Failure to Follow Medical Advice, which means if you ignore medical advice and are unable to work then you would not be able to claim.

Suited Occupation Cover – A policy that will pay out if you are unable to carry out any job that is suited to your skills, experience or education. It is not as good as Own Occupation cover but it is better than the remaining cover types.

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