Income Protection Insurance
Contents For Income Protection Insurance Hong Kong
- 1 Income Protection Insurance
- 2 Compare Find And Buy The Best Low Cost Affordable Income Protection Insurance
- 3 How Income Protection Insurance Can Help You
- 4 How Income Protection Insurance Can Help Your Family
- 5 Hong Kong Income Protection Insurance FREE Comparison Quotes Compare Find And Buy The Best Affordable Low Cost
- 6 Income Protection Insurance Quotations
- 7 What Is Income Protection Insurance
- 7.1 Compare Find And Buy The Best Low Cost Affordable Health Insurance Plans In Hong Kong
- 8 Enquiry
- 9 We Live In Hong Kong You Can Find Us Here
How Income Protection Insurance Can Help You
How Income Protection Insurance Can Help Your Family
Hong Kong Income Protection Insurance FREE Comparison Quotes Compare Find And Buy The Best Affordable Low Cost
Hello and welcome.
By visiting our site we assume you are looking to Compare Income Protection Insurance Comparison Quotes to ensure that you obtain the Best Income Protection Insurance at the most affordable price for you.
We are the leading Independent Income Protection Insurance Broker Agent in Hong Kong and we work with the Top Insurance Companies in the World so that we can provide our Clients with the Best Income Protection Insurance available.
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Income Protection Insurance Quotations
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What Is Income Protection Insurance
Income Protection Insurance (IPI) is an insurance policy, paying benefits to the policyholder when they are incapacitated and hence unable to work due to illness or accident. IPI policies were formerly called Permanent Health Insurance (PHI).
Income Protection Insurance Definitions
- Incapacity will be defined on one of the following four bases:
- Own occupation – the policyholder is incapacitated if they are unable, following illness or accident to perform their own occupation and are not working in another job.
- Suited occupation – the policyholder is incapacitated if they are unable, following illness or accident to perform an occupation suitable to them given their education and training etc.
- Any occupation – the policyholder is incapacitated if they are unable, following illness or accident to perform any occupation at all.
- Activities of daily living (ADLs) – the policyholder is incapacitated if they are unable, following illness or accident to perform a number of defined functions such as dressing and undressing, washing, eating, climbing stairs, shopping, cooking etc. The policy will define the number of functions and their definitions.
- Benefit limits – nearly all policies limit the benefit payable to some percentage of the policyholder’s normal earnings. The limit is usually around 70% of gross earnings, but could be less for high earners. Any state benefits payable may reduce the maximum benefit and benefits from any other policies may also reduce the maximum.
- Deferred period – the deferred period is the time between a valid claim and the commencement of benefit payments. The deferred period chosen has a significant influence on the cost of a policy.
- Proportionate benefit – to encourage the return to work of a policyholder recovering their health, many life offices offer to pay a reduced benefit if the policyholder takes a part-time or lower-paid job after recovering their health.
- Free limit – the IPI policy will be only be valid while the policyholder is permanently resident in the area defined in the policy. Most policies will allow holidays and temporary residences outside of these areas.
Income Protection Insurance Benefits
Income protection insurance policies offer a number of benefits:
- Benefits are payable when the policyholder becomes incapacitated and after the deferred period has passed and continue until the earliest of death, recovery of health, retirement or the term of the contract.
- Benefits are paid regularly (usually weekly or monthly) and may be free of tax.
- The insurance company cannot cancel or refuse to renew the policy provided that the policyholder continues to pay the premiums.
- A waiver of premium option may be provided whereby premiums for the IPI policy are not required while benefits are being paid from the policy, but the policy cover continues as normal.
Income Protection Insurance Restrictions
There are a number of restrictions that can affect a policyholder’s eligibility for income protection insurance:
- The policies do not pay out if the policyholder becomes unemployed for a reason other than illness or accident.
- The deferred period is usually quite long, often a minimum of 4 weeks but perhaps as long as 52 weeks. Premiums decrease as the deferred period increases.
- There are a number of exclusions which apply to most policies, so that no benefits are payable for accidents or illness arising from events such as drug or alcohol abuse, criminal acts, intentional self-harm, wars and pregnancy.
- Due to the benefit limits, the maximum regular payment is usually restricted to prevent moral hazard – if the benefit exceeds the policyholder’s income they have a reduced incentive to return to work once their health recovers.
- On change of occupation (or unemployment) of the policyholder the policy may become invalid, or the life office may require the premiums to be changed to reflect the new risk.
- For individual policies, as the benefits paid are not taxable income, the tax relief available to the policyholder may be reduced so, for example, tax relief on pension contributions is no longer available.
Income Protection Insurance Variations
In addition to standard fixed-premium Income protection insurance policies there are a number of variations available from some life offices:
- Renewable IPI – renewable policies give the policyholder a right to renew the policy, possibly with an increase in cover, at a set period (often 5 years), based on the prevailing premiums for a person of their age and occupation. Premiums will initially be cheaper than a fixed IPI policy but will then increase each renewal as the policyholder gets older.
- Reviewable IPI – the term of a reviewable IPI policy will be the same as a fixed policy, but the premiums will be reviewed (and almost invariably increased) by the life office every few years, based on its general rates (not based on the health or claims of the policyholder). Initial premiums will then be cheaper than for a standard policy.
- Increasing IPI – the value of the benefit payable by a fixed-benefit policy is eroded over time by inflation so policies whose benefits increase are often more suitable. The benefits may increase at an indexed rate (such as the Retail Prices Index), a fixed percentage or by a percentage chosen by the policyholder every few years. For such increasing policies, premiums usually increase as well.
- Unit-linked IPI – other IPI policies have no investment element and hence no surrender value, however a unit-linked policy has an investment element similar to unit-linked life assurance policies. Premiums will normally be more expensive than standard policies due to the investment element, and could be still more expensive if the return on the invested premiums is poor.
- Group IPI – employers may provide a group IPI policy for their employees. For group policies a maximum payout period may apply and the policy will expire if the employee ceases employment with the employer.
Income Protection Insurance Suitability
- IPI policies meet the general need of wage earners to protect their income against the inability to work due to accident and illness. The level of state benefits provided (such as statutory sick pay (SSP) and incapacity benefit) usually falls well below the income of average earners, so additional insurance is required to make up the difference. If a policy is purchased it is usual for the term of the policy to last until the retirement age of the policyholder. For those not working such as parents caring for children, a policy paying out based on ADLs is appropriate as the definitions for incapacity based on occupation may not be relevant.
- IPI policies are not suitable insurance against unemployment in general as benefits are only paid if the unemployment arises due to incapacity.
- IPI policies do not provide health insurance, death benefits or critical illness cover, so health insurance and/or life assurance and/or critical illness cover may also be needed by the policyholder.
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