Income Protection (are you covered)

Most people recognise the need to insure their lives, especially to cover their mortgage and other major borrowings. Like many employers, the police service provides a valuable death-in-service benefit. Those with access to the Police Federation’s group cover can add to their life cover on attractive terms. Normally, the only reason to look beyond these 2 group schemes is when you buy a house. You probably want to take out personal life cover for the mortgage debt, and include your partner.

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Most people recognise the need to insure their lives, especially to cover their mortgage and other major borrowings. Like many employers, the police service provides a valuable death-in-service benefit. Those with access to the Police Federation’s group cover can add to their life cover on attractive terms. Normally, the only reason to look beyond these 2 group schemes is when you buy a house. You probably want to take out personal life cover for the mortgage debt, and include your partner.

But a much greater risk is being long term sick – far more likely than dying during your working life. As a nation, we are very bad at covering this risk – and police are no exception. Of course, employers will cover you in the shortterm – but not many extend this cover to the longer term. In the police service, you are liable to be placed on half pay after 6 months’ sickness, and no pay after a further 6 months. With no prospect of a recovery, medical retirement will follow – an enhanced pension, but still a considerable loss of income.

In 1997, following the introduction of Regulation 46 (now Reg 28), MPFS launched its Income Protection Plan. This is also known as Permanent Health Insurance – “Permanent” because our cover continues throughout your working life (unless you choose to cancel it). It paid out 60% of your loss of income until age 55 – that age limit is now 60. The benefit is not liable to tax.

Since that time, our claims experience has improved – largely due to the increased use of recuperative duties. We have passed the saving in cost on to our members by reducing premiums and improving benefits. We have added a critical illness benefit of £15,000 that pays out on major medical conditions, such as heart attacks, strokes and diagnosis of serious cancers. The only way in which we have tightened the cover since launch is to exclude stress and mental conditions after medical retirement.

We are now improving the benefits further. Up to three months’ pensionable pay will be paid as additional lump sum benefits as you progress onto half pay, and then no pay, and in medical retirement when you gain alternative employment. We are also improving the income paid out prior to medical retirement – e.g. you will receive 60% of insured pensionable salary during the no pay period, with no reduction for any state benefits. the income paid during medical retirement will be modified and will no longer reduce as your pension goes up.

Whilst we are in general keeping our premium rates unchanged, we have had to review our charges in the light of the EU gender directive. Income Protection claims for females are significantly higher than for males, and we must rely on national statistics published for the purpose of the directive. This will mean a 20% increase to the premium we charge for females commencing January 2009, when the improved benefits are introduced.

Finally, under our Jubilee year promotion, there is up to 3 months free cover. For policies underwritten in October to December, cover is provided immediately on acceptance, but there is nothing to pay until January. So, if you need cover, why wait?).