Sabbatical cover
Here, the policy remains in place at the full benefit amount and premiums must still be paid. The client, in this instance, must have stopped working and taken a career break. If the client falls ill and claims during that time, they would be assessed and covered as though they were in work, on the employed own-occupation definition.
Typically this benefit is only offered on specific occupations such as the medical profession, however this will vary across providers.
The benefit payment would be based on their income prior to taking the break. Some insurers offering this option do not have any cap on the maximum claim duration or benefit paid. Others might cap it at, say, 12 months, says Higgs.
Obviously, the latter option does not involve a reduction of – or complete hold on – premiums, so is perhaps not very helpful in terms of the cost of living crisis, but it is worth understanding the differences between the two regardless.
Career/sabbatical break options are more often available on income protection than on life insurance or critical illness cover, explains Higgs.
“A number of insurers have used these [career breaks] to potentially support clients in financial troubles, as they enable premiums to be stopped or reduced for a period of time. The downside is that there will be no cover in place either,” he adds.
Something else to be aware of, according to Eddy Edwards, head of brand for DeadHappy, is that if the client gets more than six months from the point of underwriting or the premium reduction, there might be no guarantee they can increase their cover to where it was without answering some health questions again.
Premium holidays
The second aspect is the support that providers initially put in place in response to the Covid-19 pandemic, perhaps to help those on reduced pay due to furlough. Although a temporary offer at the time, some providers have continued to offer premium holidays in response to the cost of living crisis.
“This is a mix of things with varying benefits,” says Higgs. “Some mutuals use their status and their member fund to pay the premiums of clients struggling financially. This is really positive as cover remains in place.
“Others will offer a premium deferral. While helpful to keep the policy in place in the short term, the client is not covered during the period and requires the missed premiums to be repaid, which could cause more problems down the line.
