Income protection for business

If you are considering some form of income protection insurance as a potential financial safeguard against situations where you may be unable to work due to accident or illness, then it may be advisable to think a little about definitions of incapacity.

If this sounds dull, you may wish to persevere because it could make a significant difference to the type of cover you obtain and therefore the type of income you have available to you in the above sorts of circumstances.

Daily living activities

This is typically an entry level form of cover.

It operates quite simply by defining a range of ordinary daily activities that might include things such as bending, lifting and walking etc.

Some policies may pay out if you are medically proven to be unable to complete a number of the defined activities without either pain or risk of further serious effects on your health.

Suited occupation

Policies providing this type of cover typically define incapacity as being your inability to work even in a related and suitable activity. 

For example, you may be some form of commercial driver and a leg injury may make it impossible for you to drive.  Yet this type of policy may require that if your employer offers you an alternative clerical position until your leg is recovered, you accept it.

In other words, it would not replace your income in situations where you had the opportunity to work in another suitable occupation pending your full recovery.

Own occupation

The highest level of cover is that typically offered by this type of policy.

Essentially it would recognise your inability to carry out your regular occupation to be grounds for paying you the insured income replacement sums.

The qualifying circumstances

If the above three types of policy define different interpretations of incapacity, you may also need to take into account that individual policies may have their own definitions of what are acceptable causes of such incapacity.

Some policies may, for example, exclude injuries arising through your participation in sport. You might also find that some consider certain categories of occupation as being too dangerous to cover.

It might also be relatively commonplace to see policies exclude claims arising from your engagement in criminal activities. 

It is important to look closely at both the policy and any supporting documentation that comes with it, if you are to be sure that the cover is going to be suitable for your particular lifestyle.  Products such as Drewberry Income Protection may offer a high degree of flexibility in how you configure your policy, premiums and cover, though it is always important to look closely at all associated terms and conditions.

One day this may prove to be an important area to you and one that you will be glad you spent a little time looking at more closely.