One Path and Pre-disability income on Income Protection claims.
For some time, I have "had a bee in my bonnet" about Income Protection claims. A situation that concerns me arises when a policyholder is on a long-term Partial Disability claim. All insurers offer (some included, some at extra premium) CPI linking of benefits while on claim. This is well and good, as long as they CPI link the client's Pre-Disability income. Otherwise, the partial benefit gradually reduces in real value.
I had cause to ask One Path about this recently and was disappointed to be advised that they definitely don't link the Pre-Disability income. I prepared the following tables and sent them to One Path.
The first table shows the effect of CPI linking the monthly benefit but not the Pre-Disability Income. The second table CPI links both.
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Sum Insured: |
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$6,000 |
per month |
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Pre-Disability Income proven at point of claim: |
$8,000 |
per month |
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Post Disability Income |
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$3,000 |
per month |
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CPI |
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3% |
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Monthly Benefit in year: |
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
9 |
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Pre-Disability Income |
$8,000 |
$8,000 |
$8,000 |
$8,000 |
$8,000 |
$8,000 |
$8,000 |
$8,000 |
$8,000 |
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Sum Insured |
$6,000 |
$6,180 |
$6,365 |
$6,556 |
$6,753 |
$6,956 |
$7,164 |
$7,379 |
$7,601 |
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Post Disability Income |
$3,000 |
$3,090 |
$3,183 |
$3,278 |
$3,377 |
$3,478 |
$3,582 |
$3,690 |
$3,800 |
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Benefit per formula |
$3,750 |
$3,793 |
$3,833 |
$3,870 |
$3,903 |
$3,932 |
$3,956 |
$3,976 |
$3,990 |
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Benefit as Percentage of CPI linked pre-Disability Income |
46...MORE»
Previous News
One Path’s recent change to their Medical coverTuesday, April 10th, 12:37PM
I am staggered that One Path got away with their recent change when they changed the product to require any new medical cover to be an add on benefit to another product. To buy a new One Path medical cover, it must be attached to Life, TPD, Trauma or Income Protection cover. I expected to hear howls of outrage from advisers. MORE»Fidelity Income ProtectionThursday, March 29th, 9:14AM
Changes to the wording make it easier to issue policies, but advisers should be careful about proof of income. MORE» |
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