Income protection policies widened for skilled workers

Surgeons and other highly-skilled professionals are being offered better protection against not being able to do their jobs due to injury or illness.

Several insurers have recently altered their income protection policies to allow highly-skilled workers to make claims if they are unable to do their “own occupation”, rather than a “suited occupation”.

The “suited” definition was problematic for some highly-skilled professionals, such as surgeons. Claims could be denied if they had injured a finger, affecting their ability to operate, but they were able to work in other related fields, such as consultancy. “These highly-skilled individuals presented the highest risk in terms of claims costs so, until recently, they were only offered suited occupation cover,” said Aviva, the UK’s largest insurer. “However, we accept that some medical professionals just want to do their jobs, so we will offer them the choice of either the ‘suited’ definition or ‘own occupation’ definition, which will be assessed on their ability to perform their role,” Aviva added.

Income protection policies typically pay half to two-thirds of gross monthly income if the policyholder can’t work due to injury or illness, with cover continuing until they return to work or retire. Other insurers have also recently made own occupation cover available to professionals. Last month, Bupa added 130 own occupation definitions to its list, including dentists, lecturers and surgeons.

But this cover comes at a cost. Aviva said premiums for a 35-year-old surgeon insured for £2,500 per month would rise by 70 per cent to £189 per month for an own occupation, rather than a suited occupation, basis.

Meanwhile, Legal & General joined the rest of industry in removing a definition from its policies which meant benefits would only be paid if the individual could not work at all.

Industry observers welcomed recent developments. “It is clearly much easier if the claim can be decided on whether the insured can do his or her normal job,” said Peter Le Beau at the Income Protection Task Force.