Q1. Under the Income Protection Benefit, how do the 3, 6, 12 & 24 month benefit terms work?
A1. This refers to the maximum period that a benefit will be paid to the client in the event of a claim.
Q2. How does the Broker commission structure work?
A2. FMI offer three options of commission payments to the brokers. These are:
- As-and-When Commission. Commission is calculated as a percentage of monthly premium, and is payable monthly in arrears for each collected premium, for the life of the policy.
- Annualised Commission Primary Commission is calculated upfront at the start of the policy, based on Life Commission calculations, and is paid as a lump sum payment upon first premium collection. Secondary commission is calculated as a third of Primary commission and is payable as a lump sum upon the 13th premium collection.
- Monthly Commission Primary Commission is calculated Upfront at the start of the policy, based on Life Commission calculations, but is paid over a 12-month period, beginning from first premium collection. Secondary commission is calculated as a third of Primary commission and is payable over 12 months beginning from the 13th premium collection.
Q3. Explain the Automatic Benefit Increase (ABI)?
A3. A client may elect at the inception of cover to choose a pre-claim benefit of 0%, 5%, 7,5% and 10%. This means that should the client have opted for this escalation, their cover will escalate annually by the amount chosen and this will result in an increase in premium.
Q4. How do the different premium patterns work?
A4.
5% Escalation
Every year on policy anniversary the amount of cover will remain constant while premiums will increase by 5%
Level Premiums
For a selected amount of cover the premium is fixed for the life of policy.
Age Rated
Every year on policy anniversary the premium changes to reflectthe probability of claim at that age.
Q5. Can a client change from premium pattern at a later stage?
A5. Yes, however a new quote would have to be done, taking into account the current age of the client.
Q6. Can a client pay premiums in cash?
A6. No, FMI do not accept cash premiums.
Q7. Explain the Primary, Fortnightly, Monthly & Quarterly Waiting Periods?
A7. The main difference between these three benefits is the waiting periods. These are as follows:
Primary:
Benefit pays retrospectively from day one after an initial waiting period of 7 days following a disability that leaves the client unable to perform the duties of their occupationfollowing.
Fortnightly:
A waiting period of 14 days applies to this benefit. Benefit does NOT pay retrospectively to day one. Benefit pays from day 15.
Monthly:
A waiting period of 30 days applies to this benefit. Benefit does NOT pay retrospectively to day one. Benefit pays from day 31.
Quarterly Cover:
A waiting period of 90 days applies to this benefit. Benefit does NOT pay retrospectively to day one. Benefit pays from day 91.
Q8. What is Permanent Income Protection (PIP)?
A8. This benefit is more commonly referred to as PHI cover in the insurance industry. The PIP benefit pays on expiry of the selected waiting period until a client has returned to work or until retirement age is reached, whichever is the earlier. Payment of the PIP benefit is subject to LOA rules.
Q9. Are the original application forms required to be couriered to FMI?
A9. No, as long as the broker retains the original forms on his records.
Q10. Can a policy be amended during claim?
A10. Yes. A policy may be amended during claim, however an amendment will only affect future cover or claim payment. The existing claim will continue to pay out as per the status of the policy at date claim commences.
Q11. Is the policy tax deductible?
A11. In terms of section 11(a) of the Income Tax Act for self-employed/commission earners and section 23 (m) of the Income Tax Act for employed salaried members, income protection premium contributions are tax deductible.
Q12. How do I claim?
A12. A claim may be lodged by contacting the FMI Call Centre on 086 010 1119
Q13. When does a policy cease?
A13.
The maximum period we pay out for this benefit is shown on a client's schedule. They will either have chosen 6, 12 or 24 months. However the payouts may stop before the maximum period is up. We payout only until the first of these events takes place:
Temporary Income Protection:
- The client's full recovery;
- The day we consider the client able to go back to their own occupation;
- The client's death;
- The policy anniversary following the client's chosen retirement age or at the expiry of the term of the policy, whichever is the earlier;
- The end date of this benefit;
- Notification from the client to cancel the policy.
- The terms and conditions of the policy will prevail.
- The date the client is fully recovered;
- The date the client are able to work in their own occupation or any suited occupation they can be expected to do because of training, skills or experience;
- The client's death;
- The policy anniversary following the client's chosen retirement age;
- The end date of this benefit.
- The payouts end on the earliest of:
Q14. Do clients have to undergo underwriting in the event of an increase in cover?
A14. Yes, if a client requests an increase in cover then the increase will be subject to underwriting. For a BPE policy this does not apply to cover increasing due to the annual Automatic Benefit Increase (ABI), Annual Review Option, Reinstatement Benefit, Change in Circumstances Benefit and the Future Income Protector.