Chapter 1, Income Protection

[Muskan Hamirwasia]

Under section 2.4, Claims definition, the following is mentioned -

"The expected claims cost will usually be highest for the ‘own occupation’ definition and lowest for the ‘any occupation’ definition. These two definitions are straightforward compared to the ‘any other suited occupation by education, status or training’ definition, which has the potential for dispute at the claims stage. "

I do not understand how will the expected claims cost be highest for own occupation? Since this will be a fairly certain amount compared to the any occupation. Please help me understand the bold statement

 

[Mark Willder]

Under section 2.4, Claims definition, the following is mentioned -

"The expected claims cost will usually be highest for the ‘own occupation’ definition and lowest for the ‘any occupation’ definition. These two definitions are straightforward compared to the ‘any other suited occupation by education, status or training’ definition, which has the potential for dispute at the claims stage. "

I do not understand how will the expected claims cost be highest for own occupation? Since this will be a fairly certain amount compared to the any occupation. Please help me understand the bold statement

Hi Muskan

The point being made here is about the expected claims rather than their variability.

Consider a manual worker such as a builder. A physical injury is likely to mean that they are unable to do their own job, so they could claim under own occupation. However, they may still be able to do other less physically demanding jobs and so wouldn't be able to claim under any occupation. So the claim rate is highest for own occupation and so this has highest cost.

Best wishes

Mark