Risk Clinic: Over-insured, under-employed


My 45-year-old client was made redundant due to the recession, but has recently started a new yet much lower-paid job. With his income protection (IP) policy covering his last wage level, he is now over-insured and would not be able to claim his full benefit sum. He has affordability problems with life and critical illness (CI) and we will probably have to downgrade him. What should I consider?

Wayne Jackson, Premier Choice Group Assuming that the new employer is not offering any employee benefits and that he has dependants in view of his life cover, in relation to the IP policy I feel it would be beneficial for him to keep the policy but apply for the cover to be reduced to keep in line with his current earnings. A further premium saving could be made by requesting to extend the deferred period (assuming it is currently 13 weeks) to 52 weeks. While I suggest this, it will of course depend on his contract of employment in relation to sickness pay and any savings to fund an in...

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