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CARERS RIGHTS DAY 2020 – WHICH INCOME PROTECTION PLANS OFFER SUPPORT FOR CARERS?

CARERS RIGHTS DAY 2020 – WHICH INCOME PROTECTION PLANS OFFER SUPPORT FOR CARERS?

The UK has an unpaid army of dedicated carers made up of mums, dads, brothers, sisters, aunties and uncles and friends who take it upon themselves to look after a family member, partner or friend who needs help because of their illness, frailty, disability, a mental health problem or an addiction and who cannot cope without their support. In recognition and support of all the UK’s unpaid carers, Thursday 26th November is Carers Rights Day which helps carers know where they can get support and raises awareness of carers’ needs.

Sometimes people caring for relatives do not think of themselves as carers, as they are ‘just’ looking after their parent or child, as family members do. This is perhaps why many do not look at whether they are eligible for the range of financial, emotional and practical support that carers may be entitled to. But caring for someone can be demanding and make it difficult for carers to take time out for themselves and to juggle their care responsibilities with work, which will have financial implications.  In this article we examine the support providers offer to carers on income protection plans.

Figures from the charity Carers UK estimate that there are now around 13.6m unpaid carers in the UK – up by 4.5m this year due to Covid-19 – so it is likely that many advisers know clients who provide care to friends and relatives who are unable to look after themselves. Providing financial support to someone who has not had an accident or become too ill to work themselves goes beyond what income protection is designed to do. However, insurers are increasingly looking for new ways to add value to their plans and this can mean providing wider support than traditionally offered.

There are four income protection insurers that offer some sort of carer support within their plans – AIG, British Friendly, LV= (excluding its personal sick pay product) and Zurich (Select plans only). They all offer this as an additional benefit, so it does not affect the client’s ability to claim on the main benefit.

AIG, LV= and Zurich offer their carers’ benefits as a contractual benefit, while British Friendly provides this as a discretionary benefit, so the insurer could remove it at any time.

AIG and Zurich both offer similar benefits whereby they will pay the monthly benefit or £1,500 a month – whichever is lower – for up to 12 months. This payout will be made providing the life assured’s spouse, civil partner or child is unable to complete at least three of a set of defined activities after a three-month period – or 90 days with Zurich.

As our table shows, AIG uses a work tasks definition to assess a client’s eligibility for the carer’s benefit while Zurich uses activities of daily living.

AIG – Working Tasks
Zurich – Activities of Daily Living
Walking – The ability to walk more than 200 metres on a level surface
Washing – able to wash and bathe, including getting into and out of the bath or shower.
Climbing – The ability to climb up a flight of 12 stairs and down again, using the handrail if needed.
Dressing – able to put on, take off, secure and unfasten all necessary items of clothing.
Lifting – The ability to pick up an object weighing 2kg at table height and hold for 60 seconds before replacing the object on the table.
Feeding themselves – able to eat and drink prepared meals.
Bending – The ability to bend or kneel to touch the floor and straighten up again.
Continence – able to maintain a satisfactory level of personal hygiene by using a toilet and controlling bowel or bladder functions.
Getting in and out of a car – The ability to get into a standard saloon car, and out again.
Moving around – able to move from one room to another.
Writing – The manual dexterity to write legibly using a pen or pencil, or type using a desktop personal computer keyboard.
Getting in and out of bed – able to get out of bed into an upright chair or wheelchair and back again.

British Friendly offers its care assistance benefit if the life assured’s partner or spouse, child (up to age 18) or parent requires full-time care. Where children needing full-time care are under the age of five, British Friendly requires a doctor or consultant to confirm that the child needs at least 35 hours of full-time care a week and the provision of additional essential care beyond what would be expected for a healthy child.

Where older children that are still in full-time education need full-time care, the requirements are similar – they must require full time care for at least 35 hours a week and be totally incapable of attending their school or college due to their injury or illness.

The criteria where it is a spouse, partner or parent is obviously a bit different. As well as needing at least 35 hours of full-time care a week, they must be incapable of working in any occupation, be unable to complete basic tasks such as dressing and washing themselves, while difficulty communicating their needs or needing supervision to avoid putting themselves or others in danger are also part of the eligibility criteria.

If a client meets the above criteria, British Friendly will pay the life assured £125 a week after a four-week deferred period, with the first payment including an additional payment that equals the amount of benefit payable for deferred period). Claims can last for up to 26 weeks for a partner, spouse or child and 13 weeks for a parent, but can only be made if the life assured is below age 60.

LV= takes a different approach by offering two benefits to support carers. One is a waiver of premium benefit, so if the client is forced to stop working because of their caring responsibilities, LV= will continue pay their income protection premiums for up to six months This can either be six consecutive months or six premiums over several non-consecutive periods.

LV= does not place restrictions on who a claimant is caring for, so clients can claim regardless of who they are caring for – partner, parent, child or someone else.

The other benefit LV= offers is its ‘parent and child cover’. This provides a lump sum of six times the monthly benefit – capped at £25,000 – if a child of the life assured is diagnosed with, and meets the definition of, one of 54 health conditions. These conditions and definitions are based on LV=’s critical illness wordings, which were not upgraded when the firm improved its critical illness definitions in January this year. However, this is a minor point as many of the conditions covered by LV= are unlikely to lead to the child being unable to carry out the defined activities as set out by AIG and LV=.

Parents of children who are diagnosed with these conditions are likely to need lots of time off worth to spend it with their child, so a lump sum payment would be welcome, especially if parents are having to take unpaid leave. Another positive is that this benefit has no waiting period, which is obviously preferable to a deferred period.

All four insurers should be commended for providing what could be valuable financial support to clients who are providing vital care for others. Such benefits highlight how income protection plans are now expanding and offering benefits to clients in far more situations than just their own ill health.

About The Author

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As well as writing for Protection Guru, Amanda Newman Smith is the feature writer at adviser trade publication Money Marketing. She started her career at a local newspaper in London and has been writing about protection products since 2000. In her previous role at Money Marketing she specialised in analysis of new financial products, including those in the protection market. Having recently become interested in antiques, Amanda spends her free time with her husband and their three children, hunting for unloved pieces to restore to their former glory.

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