The product is designed to protect a person’s income against the risk of unemployment and incapacity through accident or sickness. The majority of income protection plans calculate premiums on the basis of factors such as the nature of employment, age and sex, but this plan applies the same approach to premiums as accident, sickness and unemployment policies. Policyholders are charged £5 for every £100 of cover they require up to a maximum of £1,500 a month or 50 per cent of the gross monthly salary, whichever is lower.
To qualify for a claim, unemployment and incapacity must last at least 30 days, but unemployment claims cannot be made during the first 120 days of the policy. Benefits are paid out for a maximum of 12 months.
Under the terms of this policy, incapacity means a condition that stops a person from doing their own job, any similar job or any other job they are reasonably qualified to do. This is an any occupation definition, which is more onerous than some policies that have an own occupation definition.
Flat-rate premiums are a good idea for some people, particularly those in blue-collar work or professions regarded as dangerous or high risk who may find it more difficult to get affordable cover. However, like any policy, this one does have its limitations and some people may be able to get more cover through other plans such as Norwich Union’s Safe Guard policy. While premiums for this plan start at £10 a month and are calculated on an individual basis, the maximum cover is higher than Safety First at 60 per cent of gross earnings or £120,000 a year.
The definition of incapacity is also different as it depends on occupation. For some occupations, the definition will be based on the failure to complete at least three out of seven activities of daily working or suffering a serious illness, while for others the same definition as Safety First will be applied.