There are many individuals today who can’t take out income protection because of the occupation that they perform. The three main reasons an insurer would decline to offer a customer income protection because of their occupation are:
- They are at a high risk of being injured while performing their occupation. For example, oil rig workers, divers, and security guards.
- Their occupation is highly sensitive to claim, i.e. they are highly likely to be deemed unable to perform their occupation because of relatively minor injuries or illnesses. For example, a musician may be unable to work for months because of a dislocated finger.
- They don’t earn an actual income from working, for example, homemakers and full-time students.
While declining to offer a traditional income protection benefit to these occupations may be necessary for some insurers to manage the risks it accepts, it does mean that some income earners cannot protect themselves against any injury or illness. For example:
- An oil-rig worker cannot get cover for accidents that happen to them while they are not working on a rig, or for any illness that they suffer.
- A musician cannot get any cover for injuries or illnesses that happen to them, for any length of time.
- A homemaker may not earn an income, but the impact on their spouse if they were unable to work is significant. It is likely that their spouse would need to sacrifice a large part of their income to replace the work that the homemaker performs.
Outright declining someone applying for income protection because a part of their occupation is too risky effectively throws the baby out with the bathwater. Insurers have to do this because occupational disability is a comprehensive claim criterion – it will pay for any injury or illness for as long as the life insured is unable to work in their own occupation.
This is why we have developed Event Based cover as an alternative to traditional income protection. Instead of having occupational disability as a claim criterion on an Event Based policy, we list 208 events and define how long your clients will be paid for if one of these events happens to them. For high-risk occupations, we remove certain claim events from the list, or we exclude claims for injuries that happen while working.
We established the 208 events that would trigger a claim on an Event Based policy by analysing over 20 years of claims on our traditional income protection benefits and determining what the most common causes of claim were. This helps to ensure that the list of events is a comprehensive list of what an individual is at risk of suffering. The list includes everything from the minor (for example, influenza for up to 14 days of payment), to the major (for example, stage 3 cancer for two years of payment).
FMI’s Event Based cover means that instead of being outright declined, income earners who perform these occupations are now able to get comprehensive cover for most of the injuries and illnesses that would have an impact on their ability to earn an income.