Insurers Update Income Protection Terms to Cover the Furloughed Employees

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ActiveQuote, the comparison site for protection insurance, has revealed that income protection (IP) insurers are updating their terms for vulnerable policy holders and furloughed employees during the Covid-19 outbreak at ‘unprecedented’ levels.

Providers are accepting new applicants, including those on furlough, for accident and sickness policies as well as introducing payment holidays and premium breaks for existing policy holders, according to ActiveQuote.

The UK Government’s furlough scheme to help businesses pay millions of employees unable to work due to the coronavirus outbreak opened on Monday (April 20th), with more than 140,000 companies reported to have applied on its first day of operation.*

IP providers have meanwhile introduced a range of new terms for existing and prospective policy holders, including those on furlough, as increasing numbers look towards income protection for the future.

Rod Jones, Head of Partnerships at ActiveQuote, said:

“We have found that the current situation has seen more people than ever are turning their attention to the benefits of having income protection in place, regardless of their employment status.

“We are pleased to say that providers have responded to this long-awaited uptake in interest by flexing their terms in support of existing policy holders, as well as encouraging those who have

already seen their employment status compromised to consider the benefits having cover in place can bring in future too.”

“Some providers already had existing career break options available on their policies but have now modified the criteria of this option to assist in the current climate by lowering the terms of months a policy held and how many direct debits have been paid, for example,”Rod explains.

“Individual insurers have suspended policies in the past for policy amendments and other maintenance reasons – and occasionally a specific product has been withdrawn but nothing near the extent we have seen recently – so the current situation really is unprecedented in terms of amending acceptance criteria across the board,” Rod added.

Policy changes introduced since the Coronavirus outbreak include:

Provider	For applicants/policy holders on furlough
Aegon	Will accept new applications based on applicant’s full salary amount.
AIG	Will accept new applications based on applicant’s full salary amount.
Aviva	New applications based on occupation, working hours and annual earnings as of March 1 2020 – 80% salary paid if incapacitated whilst in receipt of reduced earnings.
Royal London	Cover will be based on full salary.
Shepherds Friendly	Cover will be based on 80% salary claimed on furlough.
Vitality	Cover will be based on full salary.
Provider	For other vulnerable policy holders
LV	Payment holiday available for venerable customers which pauses premiums for up to 3 months. Customers are classed as venerable if they have been subject to a recent and significant reduction in salary. Other terms apply. Whilst in this period customers are still eligible to make claims.
Holloway	From 15^th April Holloway has introduced a 3-month premium option to put policies on hold with no claims for customers who have paid a minimum 3 months premium and not currently in arrears. Available between 15^th April and 15^th July.
Shepherds Friendly	Career break option on policies extended to allow customers with a minimum of one-month’s paid premium a break of up to six months (no cover applicable) where before the a minimum of 12 months premium payment was required.
British Friendly	Customers who have paid at least one premium can use the career break option which freezes the policy (duration is optional between 1 and 24 months) including both premiums and claims.

There are four main types of income protection insurance – mortgage, redundancy, loan and accident and sickness cover – which are available as individual policies or as a package depending on your individual circumstances.

Each policy type is designed to cover a range of general living costs in the event that the policyholder is unable to work for whatever reason.

ActiveQuote saw IP enquiries peak in the last week of February due to ongoing fears and media coverage around the coronavirus outbreak, as well as increased activity from existing customers concerned about the level of cover already in place.

It is the UK’s leading comparison website and broker of health and protection insurance products, including private medical insurance, income protection, life insurance and critical illness cover.

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Finance and Investment

19 December 2024