What do you have to show to the underwriter for Income Protection
Income Protection is not available for everyone- sad reality of modern life. Let me start with who can have Income Protection Insurance – if you work as an employee and get your income from the company or organisation you work for – 99% that you would be able to insure that income. However if your income is commission based (for instance you are real estate sales person) you would have to provide annual income statements confirmed by your accountant or IRD. If you are an employee – you could provide to the underwriter a copy of your contract or three months payslips.
Income Protection application starts with a completed Personal Statement – this is a legal statement to the insurer about you. By law you are obliged to complete it honestly and to the best of your knowledge. In insurance world it is called “Utmost good faith”- meaning that the insurer (the underwriter ) is going to know everything about you what is relevant and material at that period of time. Your “Personal Statement” is going to provide the underwriter with information about your health, income and conditions of your employment. Important to understand that “an office manager” and a builder will be underwritten according to their occupation with taken into account occupational risks.
You are also required to submit an application form for Income Protection policy. This is very important part of any insurance contract- it specifies the conditions of:
1) Ownership – you can have a few owners of your insurance policy. Keep in mind if something goes wrong with you the other owner would be in title to receive the benefit your policy provides. From my point of view – ownership of the insurance policy is crucial.
Apply for “Income Protection” till you 65
You in your twenties – apply for Income Protection policy till you 65 years old. You married and you nominated your partner to be the co-owner of the policy. Life is going on- you start to earn good money and you adjust your income protection accordingly. Later on…one day.. you are diagnosed with something nasty – not yet deadly – let’s say diabetes, as the result you put on a few kilos and a few more. You feel that the relationship you have came to the end….. the person you used to be in partnership with still going to be the owner of the policy you have….second marriage and kids and you after a consultation with your financial adviser and a new Income Protection application find out that you are no longer insurable…. your ex is still the owner of the policy you have….. not a pleasant thought right? That’s right – always think – how the policy you are starting today is going to effect your life later.
On the other hand there is one more scenario – you and your family decided that you deserve a skiing holiday. You had an accident resulting head injury and you are on claim. You are not in the position to take decisions- since your partner is the policy owner -the money your policy pays go directly to your family bank account. No expensive lawyers involved- the policy you have wisely arranged for you is providing your family with a substitute of your income.