Technical Guide GROUP INCOME PROTECTION TECHNICAL GUIDE. People you can trust- A company you can rely on

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1 Technical Guide GROUP INCOME PROTECTION TECHNICAL GUIDE People you can trust- A company you can rely on

2 Who are Omnilife? Omnilife is a specialist insurer providing Group Risk benefits for employers that want to provide financial protection for their employees in the event of death or ill-health. Omnilife has more than 20 years experience providing innovative employee benefit solutions. Our success is built on providing a first class service to our customers and by concentrating on a specialist product range we are able to offer highly competitive Premiums. Omnilife is is Authorised by Prudential Regulation Authority & regulated by the Financial Conduct Authority and Prudential Regulation Authority and is fully incorporated in the UK. Omnilife has the secure backing of The Mediterranean and Gulf Insurance and Reinsurance Company (Medgulf) which is one of the leading insurance groups in the Middle East. Technical Guide This Technical Guide is an important document which compliments the issued Quotation. You should keep your guide and Quotation in a safe place in the event of a future claim or query. Your Quotation gives you an illustration of the main costs and benefits of your Policy. The Technical Guide outlines the main features and attaching conditions. This Technical Guide does not set out, or override, the detailed terms and conditions of your policy. These are included in our Policy Conditions. Throughout this guide, capitalised terms (for example Quotation ) indicate words or phrases that are included in our glossary, found in section 9 of this guide. If you would like to find out more about Omnilife Insurance Company Ltd or have any queries in relation to this guide, please contact us at marketing@omnilife.co.uk and a friendly sales executive will be in touch. This technical guide is based on the best practice standard format recommended by the Group Risk Insurance Development Group (GRID) and Association of British Insurers (ABI).

3 Contents Page Its Aims 1 Your Commitment 1 Risk Factors 1 How the Policy works Factors to consider when deciding which benefits to provide Who can be covered Termination of cover Types of cover available Supplementary benefits Definition of incapacity Benefit commencement Benefit payment periods Inflation protection Setting up the scheme Requirements for scheme set-up Evidence of health to be provided before members are covered Claims occurring during the underwriting period Cost of cover Premium calculations Additional Premiums Commission Discounts for good claims experience 4.0 Scheme accounting Information required for accounting purposes Adjustments for members who join, leave or have benefit increases during the year Cancelled Schemes Making a Claim The claim assessment process Benefit payments Employer s Lump Sum Linked claims Proportionate benefit What is not covered Overseas Cover Taxation Considerations Income benefit schemes for employees Income benefit schemes for partnerships Employer s Lump Sum Glossary 11 Further information 14 Questions and complaints 14 Compensation Law

4 Its Aims The aim of this Income Protection Policy is to provide a regular income to a Member of the scheme who is unable to work and suffering loss of earnings by reason of illness or injury. Additional costs such as pension scheme and national insurance contributions may also be covered. The Policy may also provide a proportionate replacement income to support a Member s loss of earnings if, by reason of illness or injury, a Member has to take a role with reduced earnings. Your Commitment To provide us with complete and accurate information that we request when you apply for your Policy and at each Anniversary Date and to advise us if this information changes. To make all Premiums as they fall due. To comply with all of the Policy Terms and Conditions. To notify us of potential claims as soon as possible, but in any event within six weeks of any illness or injury preventing a Member from working. To provide us with complete and accurate information that we request when you make a claim and to advise us if this information changes. To agree at outset the Eligibility Conditions that governs the scheme membership. To notify us promptly of any Discretionary Entrants or Late Entrants. To notify us promptly of any Member s Benefit that exceeds the Free Cover Level. To notify us promptly of any changes to the companies participating in the scheme and the relationships between them. Risk Factors Cover will cease upon failure to comply with the Policy terms or if Premiums are not paid when they are due. We may decline claims if you do not fulfil Your Commitments The Premium Rate for Schemes with more than 20 employees is normally guaranteed for two years, however these rates will become reviewable should the total number of lives or total sum insured change by 25 per cent or more before the end of the normal Rate Guarantee Period. If there is a change made to the Scheme Benefit Rules or the agreed Eligibility Conditions we may review the Premium Rates. Payment of Benefits may be delayed or declined if we are not notified of a claim within the specified time limits. Benefits under the Policy may be reduced if a claimant is receiving other regular income as a result of incapacity. Benefits that require Medical Underwriting may be subject to special terms or exclusions. Receipt of Benefits under the Policy may disqualify a claimant from some State benefits. Specific terms and conditions that apply to a Policy that forms part of the Quotation will usually be guaranteed for three months only. We reserve the right to cancel or amend the Policy if the number of members falls below two. There may be changes to legislation, regulation, state pension age, HMRC practise or tax rules affecting this Policy, the Benefits or premiums To notify us promptly if there are any changes to the nature of the business of the companies participating and of any changes in their location (including postcode information). Omnilife Insurance Company Ltd Page 1 of 14

5 How the Policy works This Policy is a contract between us, the insurer and you, the Policyholder. In exchange for you paying the Premium and following the Policy Terms and Conditions, we will provide cover to the Members. If a Member has a claim that meets the Policy terms and conditions, then we will pay the Benefit to the Policyholder. Our Policy is available to groups of two or more Members. You decide the Eligibility Conditions for your Policy, the amount of benefit employees are covered for, how soon and for how long benefits will be paid. You decide the Expected Retirement Age at which cover expires. This may be a fixed age up to a maximum of 65 or linked to State Pension Age. You must include all Eligible Employees in the scheme when they first become eligible. If you choose benefits that are payable for a limited period you can also choose for a lump sum payment to be paid at the end of the limited period if a claimant remains incapacitated. We will provide cover whilst the Policy is in force irrespective of the number of claims that are made. You notify us as soon as possible and in any event within six weeks of an illness or incapacity preventing a Member from working to avoid any delay or deferral of benefit payment. You and the Members concerned must provide us with all relevant information we need to assess and monitor the validity of a claim. We pay benefits monthly in arrears from the end of the chosen Deferred Period and for as long as the claim remains valid. We pay the monthly benefit to you and the appropriate benefit should be paid to the Member after deduction of tax and national insurance contributions. The Policy will continue to be in-force as long as you meet the Policy Terms and Conditions and you pay all the Premiums due. You can select to pay Premiums for the Policy on a monthly, quarterly, biannual or annual basis. The Policy will have no surrender or maturity value 1.0 Factors to consider when deciding which benefits to provide The benefit promises you have made Whether you wish to set a maximum benefit Whether all Members will have the same level of cover or whether you require different levels of cover for different categories of employee How long Members will be incapacitated for before they start to receive the Benefit (the Deferred Period ) How long the Benefit is payable for Your budget We offer a comprehensive range of standard and flexible options which can help you to design the most appropriate level of cover to fulfil your company s objectives and cost constraints. 1.1 Who can be covered Employees can be covered for the Policy benefits once they have met the agreed Eligibility Conditions. The Eligibility Conditions must be clear and agreed with us before cover can commence. Unless we agree otherwise, everyone who satisfies the Eligibility Conditions and Actively at Work requirements must be included in the Policy automatically. If you wish to change the Eligibility Conditions or the Scheme Benefit Categories after the Policy has started, you must also agree these changes with us first. Eligibility Conditions The Eligibility Conditions will be agreed prior to cover commencing and will include: minimum and maximum ages for Scheme entry the Expected Retirement Age at which cover expires any service qualification applicable Scheme Benefit Categories if more than one category of Members is to be included. For example, Scheme Benefit Category 1: Directors; and Scheme Benefit Category 2: All other Employees. When new entrants may join the scheme. For example, monthly, daily or annual entry. Omnilife Insurance Company Ltd Page 2 of 14

6 In light of Age Regulations attention should be paid to any Eligibility Conditions linked to age or service. The conditions for when an employee can join, entry dates and entry ages, must be the same for each employee within each Scheme Benefit Category. Permanent full-time and part-time employees can be covered. Fixed term contract workers may be covered for a period no longer than the expiry date of their fixed term contract. Actively at Work Actively at Work means that an employee has not received medical advice to refrain from work and is not only present at their place of work on the prescribed day, but is mentally and physically capable of discharging fully the normal regular duties associated with the job for which they are employed and working their normal contracted number of hours, either at their normal place of business or at a location to which the business requires them to travel. Any Employee who is to be included in the Policy on the must satisfy the Actively at work requirements on the date that they are first eligible for cover under the Policy. For Schemes with less than 20 members if an employee is not actively at work on the date their cover commences, cover will commence once the employee has been back to working their normal hours for five consecutive working days or provide such evidence of insurability as we may require. For Schemes with 20 or more members anyone joining the Scheme must be actively at work on the date their cover commences. For anyone not meeting this requirement cover will commence when they are next Actively at Work. Increases in sum insured & basis enhancements A Member must be Actively at Work on the working day an increase in cover or a basis enhancement (e.g. Deferred Period reduces from 26 to 13 weeks) comes into force. If a Member is not Actively at Work on the date of an increase in cover or basis enhancement on account of ill health or incapacity, cover will commence on the day they complete return to active employment. Should any other Actively at Work conditions be applied to a scheme these will be detailed in our Quotation. 1.2 Termination of cover i) Under Normal Circumstances A Member s cover will normally cease on the earlier of: reaching the Expected Retirement Age; or leaving service; or no longer satisfying the Eligibility Conditions; or their contract of employment ending; or payment of the Employer s Lump Sum where a limited benefit option was selected; or the death of the Member. ii) Cancellation of the Scheme by Omnilife We cannot cancel the Policy unless you fail to follow to the Policy Terms and Conditions. For example; You fail to pay any Premiums due within a reasonable timescale required by Omnilife You fail to comply with any reasonable request to provide information If this happens, we will write to you to inform you of the Termination Date of the Policy. iii) Cancelling the scheme You can end the scheme at any time provided that: Notification is given in writing, clearly showing your intended Termination Date Cover will then cease and you will not be liable for Premiums for any period after that date. Cancellation cannot be backdated. We will continue to pay any claims that were in payment prior to the Termination Date and will pay any valid claims where incapacity commenced prior to the date the Policy was cancelled. Omnilife Insurance Company Ltd Page 3 of 14

7 1.3 Types of cover available You can choose the type and amount of basic income benefit for your employees. This is always expressed as a percentage of salary (for example, 60% of salary). In addition, you should also decide if a State benefit deduction should be taken from the basic income benefit. The maximum amount of basic income benefit we will normally insure is: Up to 80% of salary Up to an overall maximum of 350,000 per annum. In addition to the basic income benefit you can also insure supplementary benefits such as pension scheme contributions and/or your national insurance contributions. You can also choose a limited Benefit Payment Period option. Under this option, you decide the maximum period for which Benefits are payable. The maximum period can be two, three, four or five years Cover for employees Definition of Salary To ensure the correct benefits and premiums are payable, the definition of salary will need to be agreed at outset. Some examples of acceptable benefits are:- Basic salary only. Basic salary plus agreed basis for variable payments from the employer. For example overtime, commissions or bonuses. We will usually average these payments over the previous 36 months. Total P60 earnings in the preceding tax year. We will need data to be provided that is consistent with the salary definition you wish to use. In the absence of any explicit arrangement it will be assumed that basic salary is the preferred basis. Option 1: No State benefits deduction Here the basic income benefit is calculated on a percentage of the Member s salary as above. No deduction is made for state benefits. Option 2: State benefits are deducted With this option we will deduct a fixed amount from the basic income benefit in respect of State benefits available. For the purpose of this option, State benefits can be: basic rate only basic rate plus the support component or, a notional deduction (with prior agreement by Omnilife) Option 3: Fully integrated option The basic income benefit payable under this option is the percentage of normal salary you have selected minus any State benefits payable as a result of incapacity to which the employee may be entitled. To select this option a scheme must have at least 30 Members The maximum benefit available under this option is 80% of salary less the relevant State benefits A minimum Deferred Period of 26 weeks applies The maximum terminal age is 65 or the State Pension Age if higher (subject to a maximum State Pension Age of 68) Cover for partners A different maximum benefit applies in respect of equity partners or members of a limited liability partnership due to different taxation rules. The maximum basic income benefit we will normally insure is 50% of the average net taxable earnings received in the last three years to a maximum of 350,000 per annum. 1.4 Supplementary benefits i) Pension scheme contributions You can also insure the normal contributions to a pension scheme of any employee. The maximum amount we will pay in respect of employer contributions is 35% of the employee s normal salary, subject to a maximum of 50,000. This is in addition to the limits in section 1.3. We can also include employee contributions, but these must be included within the limits shown in section 1.3. ii) National insurance contributions You can also insure employer national insurance contributions payable in relation to the basic income benefit. iii) Employer s Lump Sum This option is only available where All members of the scheme are employees The scheme has least 20 Members Omnilife Insurance Company Ltd Page 4 of 14

8 The scheme has a limited Benefit Payment Period If selected, this option can pay a lump sum on expiry of the Benefit Payment Period. The amount of the lump sum may be a multiple of salary or a multiple of the benefit payable, and will be subject to the lower of: 350,000 Five times annual salary The Member s monthly amount of basic income (excluding any supplementary benefits) multiplied by the complete months from the end of the limited period to the earliest of the following dates: when the Member s contract of employment expires the date the Member reaches their normal State Pension Age or Expected Retirement Age if earlier 1.5 Definition of incapacity In most cases (and unless you request otherwise) Omnilife will apply a standard definition of incapacity. The definition of incapacity applicable to your scheme will be shown on the Quotation and confirmed in the Policy document. Standard definition A Member is incapacitated if at the end of the Deferred Period he or she is totally unable by reason of illness or injury to perform the material and substantial duties of his or her normal occupation and is not following any other gainful occupation, whether as an employee or otherwise. This is also known as own occupation. Standard or suited definition A Member is incapacitated if at the end of the Deferred Period he or she is totally unable by reason of illness or injury to perform the material and substantial duties of his or her normal occupation, or any other occupations for which he or she is reasonably suited by reasons of training, education or experience, and is not following any other gainful occupation whether as an employee or otherwise. Standard definition switching to suited after 2 years For the first 24 months following the end of the Deferred Period a claim will be paid if the Member meets the standard definition. At the end of 24 months benefits will only continue if the Member meets the standard or suited definition of incapacity. 1.6 Benefit commencement Benefit payments will start at the end of the Deferred Period and are payable monthly in arrears at the end of each calendar month during periods of continuous incapacity. The Deferred Period is the period of time following the claimant first being unable to work due to illness or injury and is defined as, the period of incapacity before any benefit is paid. If we are notified of a claim after the end of the Deferred Period we reserve the right to commence the Deferred Period from the date we are notified of the incapacity. The standard Deferred Periods available are 13, 26, 28, 39, 41, 52 and 104 weeks. The minimum Deferred Period under the Fully Integrated option is 26 weeks. The Deferred Period is normally a period of continuous absence however there may be times when the Deferred Period is punctuated. In these circumstances and provided that the cause of absence is from the same underlying illness or injury as that when the member first became incapacitated, periods of absence may be added together to form the Deferred Period. 1.7 Benefit Payment Periods Income benefits continue to be paid provided the Member continues to satisfy the definition of incapacity until they reach the Expected Retirement Age as specified by you, or, in the case of a limited payment term option, until the end of the limited payment period. In the case of the limited payment option, periods of incapacity arising from the same underlying cause are added together and benefits will cease when payments have been made for the maximum term chosen. Where the lump sum option has been selected this will be paid at the end of the limited payment period provided the claimant satisfies the relevant definition of incapacity. Benefits will also cease on the earlier of: the death of the Member; or where the Member leaves the service of the Employer or reaches the end of their contract of employment; or where the Member ceases to be a Member of the scheme. Omnilife Insurance Company Ltd Page 5 of 14

9 1.8 Inflation protection You can choose whether benefits in payment remain level or for them to increase annually at rates of 2.5%, 3% or 5% or alternatively, linked to the Retail Prices Index subject to a maximum of 2.5%, 3% or 5%. 2.0 Setting Up The Scheme We prepare your Quotation based upon a specification provided by your intermediary. The specification will detail the Eligibility Conditions, benefit options and membership data, together with claims history for the last five years or such shorter period the Scheme may have been insured along with any Underwriting decisions that have been made for Members of the Scheme. The Quotation terms will usually be guaranteed for three months. If the inception data differs by more than 10% compared to the Quotation data, we may need to issue a new Quotation, which may result in a change of cost and / or the Policy Terms and Conditions. 2.1 Requirements for scheme set-up To provide cover we will require: A fully completed application form The deposit Premium or completed standing order form Completed Actively at Work and/or Continuation of Cover declarations Complete and accurate Membership data at the start date Details of any Member with benefits in excess of the Free Cover Level Evidence of a contractual employment extension for any Member working beyond the scheme s Expected Retirement Age Any other requirements we have asked for in our covering letter confirming risk Premiums will normally be paid annually in advance by cheque payable to Omnilife Insurance Company Limited or by electronic funds transfer. Biannual, quarterly and monthly payments are also available and will require a standing order. Cover for your Scheme will cease if the above is not provided within 30 days of the start date. 2.2 Evidence of health to be provided before members are covered Our Quotation will usually provide a Free Cover Level. This is the total amount of cover we will provide on standard terms for a Member before Medical Underwriting is required. If a Member has cover equal to or below the Free Cover Level and provided an employee satisfies the rules for joining the scheme and satisfies our Actively at Work requirement then no further evidence of health is required. If the Member has cover above the Free Cover Level then additional evidence of health will be required. Initially the member will be asked to complete an employee health declaration. On receipt of this we may require further medical evidence which could involve applying to the Member s own doctor for a report, or requiring the Member to attend a medical examination or undergo other medical tests. Once we have completed the Medical Underwriting process this may result in additional Premiums being charged or exclusions being applied to that part of the Member s benefit in excess of the Free Cover Level. In some cases we may be unable to provide cover for that part of the benefit in excess of the Free Cover Level. If the Free Cover Level increases we will not automatically enhance the Free Cover Level applicable to a Member who has been Medically Underwritten or who has had their benefit restricted to a previous Free Cover Level Discretionary Entrants and Late Entrants Discretionary Entrants Discretionary Entrants (individuals who do not satisfy the normal rules for joining the Policy) will be subject to Medical Underwriting for their full benefit and cover will be at our discretion. Initially the Employee will be required to complete an employee health declaration and further medical evidence may be required. Where an Employee is a Discretionary Entrant and the Employee s Spouse or Partner is to be covered, the Spouse or Partner will also be subject to Medical Underwriting. Late Entrants Late Entrants are Insured Persons who do not join on the first date on which they become eligible for inclusion in the Policy. Late Entrants will be required to complete a Late Entrant form for consideration and may be subject to further Medical Underwriting. Where an Employee is a Omnilife Insurance Company Ltd Page 6 of 14

10 Late Entrant and the Employee s Spouse or Partner is to be covered, the Spouse or Partner will also be subject to Medical Underwriting. 2.3 Claims occurring during the underwriting period We will provide cover from the first date we are advised of a Member who requires Medical Underwriting for a period of up to 90 days to enable the completion of the Medical Underwriting process. We provide this temporary cover for the Members full Benefit, provided they have not previously been declined by us or another insurer (in this instance no cover will be provided). The proportion of the Member s Aggregate Benefit that requires medical evidence will be subject to a pre-existing conditions exclusion and to any other underwriting restrictions we may specify. 3.0 Cost of cover The calculated Premium depends on the scheme design and the level of benefits provided. The information used to determine Premiums include: Level of cover; the insured level of income benefits to be provided Benefit Payment Period selected Deferred Period selected Eligibility Conditions Inflation protection option selected Age and gender profile of employees covered Occupation of employees covered Location of the workforce Claims history (for previously insured schemes) Payment frequency The minimum annual Premium applicable to a scheme is currently 500. This increases to 1800 for Schemes that do not pay annually. 3.1 Premium calculations (a) Schemes covering 2 to 19 employees Single Premium costed Schemes Premiums are calculated separately for each Member. With Single Premium costed schemes the Premium for each Member is calculated each scheme year based on the Member s age and applicable Premium Rate at the start of that year. If the number of Members increases to 20 or more, the scheme may be administered and costed on a Unit Rate basis as detailed below. (b) Schemes with 20 or more employees Unit Rate costed Schemes Member s Premiums are prepared as those for Single Premium costed schemes however these are then aggregated in order to provide a Unit Rate normally expressed as a percentage of the scheme total salary roll. This Unit Rate will normally be guaranteed for 2 years. If the number of members decreases to less than 20 we may administer the scheme on a Single Premium basis as set out above. 3.2 Additional premiums Extra Premiums may be charged for: Members Medically Underwritten and for whom special terms apply to that part of benefit in excess of the Free Cover Level. Discretionary Entrants or Late Entrants. Members who are older than the Expected Retirement Age and still require cover. You will be notified of any increase in the Premiums and the date from when they will be payable. If any of the information provided by you to Omnilife to calculate the Premiums is incomplete or incorrect this could mean you are not paying the correct Premium. In this circumstance, we may revise the Premium amount. 3.3 Commission The Premium is inclusive of any commission payable to your financial adviser. The commission rate is shown on the front of our Quotation. 3.4 Discounts for good claims experience The claims experience is one of the factors we use to calculate the final Premium and good experience will usually be reflected in the final Premium charged. Omnilife Insurance Company Ltd Page 7 of 14

11 4.0 Scheme accounting The Policy usually operates on one year accounting periods. At each Anniversary Date and we need new complete and accurate data in order to charge the correct Premium. Until we receive this data we will charge approximate Premiums. Once accounts have been finalised we will advise you of what arrears are due, or if you have overpaid, we will make a refund to you. 4.1 Information required for accounting purposes A full list of all Employees in the Scheme is required at the start and end of each Policy year. The list must show: name; gender; date of birth; salary; post code of Member s work location; Scheme Benefit Category (if more than one category of membership); date of joining scheme (if a new member); date of leaving scheme (if applicable); date of salary change(s) (only if the Scheme has less than 20 Members). It is also necessary to advise us if a Member s benefit exceeds the Free Cover Level during the scheme year and of any Member who is not Actively at Work and of any Member who is resident overseas or who undertakes regular business travel outside of the European Economic Area or North America. 4.2 Adjustments for Members who join, leave, make a claim or have benefit increases during the year Premiums in respect of a Member who is unable to work continue to be due throughout the Deferred Period. No Premiums are due for Members while a Benefit is being paid for that Member. (a) Single Premium cost schemes At each Anniversary Date we will calculate a Premium adjustment for the amount and duration of the cover actually provided since the last Anniversary Date (or commencement date if later). (b) Unit rate schemes At each Anniversary Date we will calculate a Premium adjustment to allow for any increases or decreases in salaries or membership since the last Anniversary Date (or Commencement Date if later). What this means is that we assume all changes occurred halfway through the Policy Year. If there is any change to the Scheme Benefit Rules Eligibility Conditions Scheme Benefit Categories legislative or tax regime Premium Rate applicable during that period, we will calculate adjustments for the periods before and after the change took effect. 4.3 Cancelled schemes A final account will be produced based on the cover provided up to the date you cancelled the Policy and either a refund will be paid or any outstanding Premiums requested. 5.0 Making a claim We aim to make the claim process as simple as possible and would normally request that the Policyholder contact Omnilife and a personal Claims Assistant will guide you through the process. Claims should be notified to Omnilife within six weeks of the Member first being unable to work. We will not consider any claims notified to us later than six months after the end of the Deferred Period. 5.1 The Claim assessment process The Policyholder must provide us with full documents and information required to process the claim. This will usually include a fully completed Policyholder claim form a fully completed personal statement, signed by the Member evidence of the Member s earnings. Omnilife Insurance Company Ltd Page 8 of 14

12 Additional evidence may also be required at outset to validate the claim and at any periodic future claim review required by Omnilife. Once all the required documentation and reports have been received, Omnilife will aim to process this claim within five working days. It may be necessary to request further information to assess the claim. This can include An independent medical examination of the Member Additional medical investigations Medical reports or other additional information may need to be provided by you or the Member If we cannot admit the claim, we will initially call and explain the rationale for the decision. We will then follow this up in writing. 5.2 Benefit payments The Benefits payable under the Policy will be paid by Omnilife to the Policyholder in UK currency. The benefit is payable monthly in arrears after the Deferred Period. Any part-month outstanding at the end of the claim payment period will be paid on a daily basis based on 1/30 th of the monthly benefit. 5.3 Employer s Lump Sum If the Policy includes an Employer s Lump Sum, this becomes payable at the end of the limited income period provided that the Member: has qualified for benefits continuously throughout the limited benefit payment period; and satisfies the incapacity definition at the end of the limited benefit payment period; and has not refused treatment or refused to participate in any rehabilitation programme. A final medical review will be undertaken prior to the end of the limited income period to determine if the Member satisfies the incapacity definition at that point. 5.4 Linked Claims A claim will be treated as a linked claim if the Member suffers a repeat of incapacity provided that the incapacity is from the same underlying cause; and the incapacity occurred within one year after the Member benefits have stopped; and the incapacity has lasted for a minimum of 14 consecutive days. Under Linked Claims, no further Deferred Period is applicable. If a Member wishes a claim to be treated as linked, Omnilife need to be informed immediately once any new period of incapacity has lasted for two consecutive weeks. For claims that are not treated as linked, a Member will have to complete a new Deferred Period before any further benefit becomes payable. 5.5 Proportionate benefit Where a Member returns to work in a reduced capacity which results in lower earnings, a proportionate benefit may be payable. The proportionate benefit is based on the reduction in gross earnings as applied to the income benefit. For example, if the gross earnings are reduced by 50%, then the gross benefit payable is also reduced by 50%. 6.0 What is not covered There are no specific exclusions in the Policy however, as a general point of law, no benefit can be payable that arises directly or indirectly from a Member s own illegal or criminal act. If we agree to provide cover in special circumstances where Medical Underwriting has been required, some additional exclusions may apply. These will be detailed in the Quotation or when we communicate the outcome of Medical Underwriting on a case by case basis. Once the Employer s Lump Sum has been paid, the Member s benefits will cease and no further benefits will be payable. Omnilife Insurance Company Ltd Page 9 of 14

13 7.0 Overseas Cover Employees who are seconded or working abroad or whose position requires them to travel outside the United Kingdom may be covered under the Policy provided Omnilife has agreed to do so in writing and all information we may have requested has been provided to us. Cover for such employees will be subject to: Meeting the Eligibility Conditions of the scheme The employee having a contract of employment with a UK registered company covered under the policy The employee being declared in the membership data and premiums being paid in respect of their cover All premiums must be paid in UK Sterling by the UK employer. The nationality of the employee and countries worked in must be declared at the commencement of cover and each Anniversary Date. We will require full details of the type of work the employee undertakes and the period of time employment is outside the UK. In all cases we require satisfactory medical evidence (in English) to support a claim and any Member based or seconded overseas may be required to return to the UK in order for us to obtain this. In the event of a claim, benefit payments for those who are seconded or working abroad will be made in UK sterling to a UK bank account of the UK employer. 8.0 Taxation Considerations As with all tax matters, Omnilife would recommend seeking financial advice since rules can be complex advice requires understanding relating to specific circumstances of the Policyholder advice may require discussion with your local tax inspector rules are subject to change. The following does not constitute tax or financial planning advice but represents Omnilife s current understanding of the treatment of Premiums and benefits. 8.1 Income benefit schemes for employees Premiums paid by the Policyholder are usually treated as a business expense. However, this relief is not usually available in respect of any Members who have a proprietorial interest in the company. Premiums are not treated as a P11D benefit for employees. Policy benefits are treated as business income and when passed onto the Member as salary should be treated as a business expense and therefore the overall tax position should be neutral. Benefits paid to the Member are subject to income tax and national insurance. 8.2 Income benefit schemes for partnerships Premiums in respect of partnership partners are not treated as a business expense. Partnership benefits will usually be payable to the partnership on trust for payment to the partner. As such, the benefits paid to partnership partners are not subject to income tax. 8.3 Employer s Lump Sum The tax treatment of the premiums and benefits will depend on a number of factors including whether employees have a contractual right or expectation to the benefit. Generally, the premiums are treated as a business expense and may be treated as a P11D benefit for employees. The lump sum is treated as a business income though when passed onto the Member as salary should be treated as a business expense and therefore the overall tax position should be neutral. Benefits paid to the Member are subject to income tax unless it is a result of terminating the contract of employment. If the payment is due to termination of the contract the benefit paid to the Member may not be subject to income tax if termination is due to incapacity or redundancy (limits apply). Omnilife Insurance Company Ltd Page 10 of 14

14 9.0 Glossary In this guide, when we refer to we, us or our we mean Omnilife Insurance Company Limited. When we refer to you or your, we mean the Policyholder as detailed in the Policy. Some terms have specific meanings and are referenced by capital letters in your Policy literature. These terms are listed below in alphabetical order together with their meanings. The singular is deemed to include the plural where relevant. Actively at Work As defined in section 1.1 Anniversary Date The annual anniversary of the Commencement Date of the Policy. Prior to the Commencement Date, the Policyholder may choose a different Anniversary Date. In this case, all future Anniversary Dates will align with the date chosen by the Policyholder. Benefit The benefit or benefits set out in your Quotation which represents the amount payable to an individual Member in the event of a valid claim. The amount of cover will be determined in accordance with the Scheme s Benefit Rules. Benefit Payment Period The maximum period of time during incapacity for which the Scheme Benefit is paid and starts the day after the end of the Deferred Period. The period may be limited to two, three, four or five years or continue to the Expected Retirement Age. Commencement Date The Policy Commencement Date as shown in the Schedule. Deferred Period The initial period of continuous incapacity when the Member is first unable to work before any benefit is paid. The standard Deferred Periods available are 13, 26, 28, 39, 41, 52 and 104 weeks. The minimum Deferred Period under the Fully Integrated option is 26 weeks. The period starts on the first day that the Member is unable to work due to that incapacity. We do not pay any benefit during the Deferred Period. Discretionary Entrant An individual who does not meet the Eligibility Conditions but who you wish to include in the Policy. Eligible Employee Anyone that meets the Eligibility Conditions for inclusion in the Policy. Eligibility Conditions These refer to the Eligibility Conditions shown in the Policy Schedule. Employee An employee of the Principal Employer or any Associated Employers shown in the Policy Schedule. Employer The Principal Employer and any Associated Employers shown in the Policy Schedule. Employer s Lump Sum A lump sum benefit payable in respect of a Member s continued incapacity after the end of a limited period of time (either two, three, four or five years) assuming the member satisfies the definition of incapacity you have agreed with us. The employer s lump sum option is not available for partnership partners or members of limited liability partnerships. Omnilife Insurance Company Ltd Page 10 of 14 GPHITG

15 Expected Retirement Age The age agreed between us as being the age at which cover for a Member expires as set out in your Quotation. The maximum age must not exceed the higher of a Member s 65th birthday or State Pension Age. Free Cover Level This is the total amount of cover we will provide on standard terms and without the need for Medical Underwriting. Late Entrant Late Entrants are Members who do not join on the first date on which they become eligible for membership of the Scheme. Linked Claim As defined in section 5.4 Medical Underwriting The process whereby the medical evidence that we need to include a Member, or part of a Member s Benefit, within the Policy is obtained and assessed. Member An employee who has been admitted to membership of the scheme and so included in the Policy. Policy The legal contract between us, the insurer and you, the insured. It comprises the Policy Terms and Conditions, which set out the standard terms of the contract, and the Policy Schedule. Policyholder The insured party named as the Policyholder in the Policy Schedule. Policy Schedule The Policy Schedule provides a summary of the key financial terms and cover provided by the Policy. It forms part of the legal contract. Policy Year The period running from the Commencement Date of the Policy up to the day preceding the Anniversary Date inclusive in the first Policy Year and the period running from the Anniversary Date to the day preceding the Anniversary Date inclusive in successive Policy Years. Premium The amount payable to provide insurance cover under the Policy. The cost of the Policy will be determined by the Premium Rate and the level of Scheme Benefits. Premium Rate The rate shown in the Policy Schedule used to determine the cost of cover. Quotation The Quotation provides the rate and key terms and conditions applicable for your Scheme and is based on, amongst other things, scheme eligibility, benefit options, membership profile and claims history along with any underwriting decisions. The Quotation will usually be guaranteed for three months unless stated otherwise. Rate Guarantee Period This refers to the period at which the Premium Rate is guaranteed not to change. For Unit Rate schemes, the Premium Rate is usually guaranteed for two successive Policy Year periods. Omnilife Insurance Company Ltd Page 11 of 14 GPHITG

16 Rules of the Scheme The Scheme rules governing Benefits, Eligibility, Beneficiaries and Dates as shown in the Policy Schedule, the Policy Conditions and any Endorsements to the Policy. Scheme The Scheme set up to pay the benefits promised under the scheme to employees. Scheme Benefit Categories Members with the same Scheme Benefit Rules will fall under one Scheme Benefit Category. Where Scheme Benefit Rules differ across Members for example due to grade, additional Scheme Benefit Categories will be required. Scheme Benefit Rules The rules for determining the Benefits for each Member. These are usually in line with the Rules of the Scheme and will depend upon, amongst other things, the percentage of salary covered and the Benefit Payment Period. State Pension Age (SPA) The earliest age at which the Member can start to receive the UK State pension, as defined in paragraph 1, schedule 4 of the Pensions Act Statutory Leave Any statutory leave taken from active employment because of maternity, adoption or paternity. Termination Date The date on which cover under the Policy ceases. Omnilife Insurance Company Ltd Page 12 of 14 GPHITG

17 Further Information Group Income Protection policies are issued by Omnilife Insurance Company Ltd whose office is incorporated in the United Kingdom. Registered number The office address is: Omnilife Insurance Company Ltd 24 Chiswell Street LONDON EC4Y 4YT Phone: Questions and Complaints If you have any questions or wish to make a complaint about your Policy, you should first speak to the financial adviser who arranged it for you. If you then still need to speak to us, you should send the details of your question or complaint to the address above. Omnilife Insurance Company Ltd 24 Chiswell Street LONDON EC4Y 4YT Phone: marketing@omnilife.co.uk If we cannot settle a complaint you may be able to refer it to: Financial Ombudsman Service South Quay Plaza 183 Marsh Wall London E14 9SR Phone: complaint.info@financial-ombudsman.org.uk Website: Making a complaint will not affect your right to take legal action. Compensation If we cannot meet our liabilities, you may be entitled to compensation under the Financial Services Compensation Scheme. Further information is available from the Financial Services Compensation Scheme. Law The construction, validity and performance of the Policy will be governed by the Law of England and Wales. Under the Policy, Members do not have any rights under the Contracts (Rights of Third Parties) Act 1999 Omnilife Insurance Company Ltd Page 13 of 14 GPHITG