Pilots Income Protection

What is Income Protection Insurance for Pilots?

Your health as a Pilot is as vital as your Class One Medical Certificate. Overseeing a commercial airliner, as you know requires you to be in great tip-top health. There may be unforeseen circumstances that stop you working, and we have found from our experience with Pilots, that it doesn’t take much for you to not be able to carry out your job from a medical perspective.

Simply defined, an income protection insurance policy for Pilots is designed to help financially if you’re unable to work because of sickness or injury. It’s a type of salary insurance, with policies usually paying between 55% and 70% of your gross annual salary on a monthly basis.

Claims from Pilots can be:

1. A heart attack that has stopped them from working, and resulted in a loss of licence
2. Musculoskeletal issues such as joint pain, or chronic back pain
3. Mental health disorders

The claims are not limited to the above. We will cover ‘how pilots can claim’ in the next sections.

Longer term income protection is more expensive, but could be the safety net you need, even paying out if you need to claim more than once during the lifetime of the policy. Payments could be used to cover your mortgage, bills, groceries – whatever you need to help you back on the road to recovery.

If you have dependents, income protection could be your family lifeline.

Loss of License Insurance Vs Income Protection Insurance

Income protection and Loss of licence insurance are two different types of policies.

Loss of Licence Insurance

A very common type of insurance that most Pilots have heard of is ‘Loss of Licence Insurance’. This is effectively a policy that pays if you suffer an injury or illness during the insured period which results in a long-term unfitness assessment being issued by the licensing issuing authority, equating to the loss of your pilot licence.

When considering if this type of insurance is suitable for your needs it may help to understand the following;

• The pay-out can be just a single lump sum, I.E if you lose your license permanently you may just receive a lump sum payment that may not even equal a full years salary.
• You must lose your licence. It is very often the case that these policies require the actually loss of license. However, from speaking to our existing clients that are Pilots, you may be signed off work for reasons that may not result in a loss of licence, IE mental health issues, or back pain.
• The policies generally end on payment of benefit, once you are paid out, the policy ends.
• Cover is often renewable each year, meaning that the insurer has control over your premiums, and the terms of your policy

Income Protection Insurance

In comparison, an Income Protection policy will often pay a monthly benefit for any illness or injury that stops you doing your own job other than specific exclusions such as self-inflicted injuries or pre-existing illnesses. We strongly suggest you consider how an Income Protection policy may provide a greater level of cover. For example:

• You do not need to lose your licence to claim. Instead policies are usually designed so that if a doctor signs you off and you cannot work, a valid claim can be made. There are likely to be exclusions to any policy (including any pre-existing conditions) however, most Income Protection policies do not list specific qualifying illnesses. Instead the emphasis is any illness or injury which prevents the policyholder from being able to work.
• You can multiple claims throughout the duration of the policy. Unlike other types of insurance policys, most Income Portection policies do not cease after you claim. Instead policies are likely to continues with the same conditions which could be up to your retirement age. This can provide protection against reoccuring issues that may prevent you from flying.
• Long-term Income Protection policies do not renew each year. The terms are instead set from day one for the lifetime of the policy.

Why take out Income Protection Insurance?

It’s never a pleasant thought to be off work due to an illness or injury, but for those with only short-term sick pay or with little or no provisions, income protection insurance could prove very beneficial.

Pilots must adhere to stringent medical and operational standards set by aviation authorities. Any deviation due to health issues can result in immediate loss of license, highlighting the need for robust income protection. These regulations are in place to ensure the safety of passengers and crew, but they also mean that pilots need to be particularly vigilant about their health.

Do I need Pilot Income Protection Insurance?

Are you self-employed Pilot? Or Even an employed with little or no sick pay? Then Income protection is certainly something worth considering.

Income Protection insurance for self-employed Pilots and Employed Pilots:

Self-employed:

Let’s assume you are the sole income provider in the household and would not be able to pay the bills if you were unable to work. As the sole source of income, choosing income protection insurance is one way to help protect yourself and your family financially. It would help ensure that you were able to cover your monthly outgoings if you were ill or injured.

Employed Pilots:

Again, let’s assume you’re the sole income provider and your employer offers sick pay. You should first check what level of sick pay you are entitled to from your employer. Income Protection policies are highly customisable and can be set up so that the monthly benefit begins after a set period of time (often referred to as the deferred period). If you’re employer only provides 3 months full sick pay, a policy should set the deferred period to begin paying the monthy benefit after any period of full sick pay has ended. Longer deferred periods often lead to lower monthy premiums.

Tips on taking out a Pilot Income Protection insurance policy.

All Income Protection policies will have some kind of “Incapacity Definition” which contributes to how an insurer will determine if the policyholder has a valid claim.

Own occupation: policies cover policyholders who become unable to do their own current job that they have previously been performing and are trained to do. In simple terms, you will be able to claim on the policy if your illness or injury prevents you from carrying out your ‘own specific job’.

For example, if a pilot were to break or fracture their arm they will not be able to fly until fully recovered and medically cleared to do so. Here the insurer would assess your claim in line with the usual tasks of a Pilot and, since the injury would prevent you from working as a Pilot, the injury would meet the required incapacity definition.

There are other types of policies that do not afford the same level of cover:

Suited occupation: A suited occupation insurance policy covers policyholders who become unable to do their own job OR a similar one that may be deemed by an insurer to be suitable based on their qualifications, skills, experience or expertise. This may not be as simple as it sounds.

For example, there are many illnesses and injuries that would not prevent a pilot from workinng on the ground either in the class room helping train pilots using flight simulators or applying their knowledge and experience in an office-absed role. A suited occupation policy therefore may not pay out if you were to have a career ending illness or injury that prevented you from flying but still saw you capable of pursuing a career on the ground.

Activity of Daily Living: A policy like this works on a stricter incapacity definition than the above two. With a policy like this, your claim will be assessed in line with routine activities people do every day without assistance. You may only be able to make a claim if you cannot carry out tasks such as walking a set distance, sitting or driving.

Making sure the type of premium is right for you:

Below are the different types of premiums that can be offered to you by an insurance provider:

• Reviewable: as it sounds, premiums that are reviewed regularly and could be increased or decreased as per your needs. These tend to start off lower, and the insurer has the power to increase the premium at the premium review. The premium review depends on the insurer and how often they review their premiums, for example; this can be once a year.
• Age Banded: premiums that are increased by a fixed or reviewable percentage as you get older. Again, these premiums start off lower, and as you get older, they increase in line with your age.
• Guaranteed: premiums which remain the same. From the outset, these may be slightly higher in price when compared to Reviewable / Age banded premiums, but rest assured these premiums remain fixed over the lifetime of the policy providing no changes are made to the policy.

Understanding how Pilots can claim on an Income Protection Policy

Step one: Step One: Diagnosis and Medical Leave
Upon any illness or injury preventing you from being able to fly, you should contact your insurer as soon as possible. They will then request an official diagnosis of your condition or injury from your doctor. If you are an employeed (rather than self-employed) it is likely that you will require a medical leave note from your employer.

Step Two: Submitting the Claim
Once all required information is gathered, you must submit the claim form along with the medical evidence. This might include detailed medical reports, test results, and a statement from the attending physician. The insurance provider will review the documentation to determine eligibility of your claim. It’s crucial to ensure all paperwork is accurately completed to avoid delays.

Step Three: Deferred Period
Income protection policies typically have a deferred period, which is the time between the onset of the illness or injury and when benefit payments begin. This period is chosen by when first setting up the policy and can range from a few weeks to several months. During this time, the policyholder must continue paying their premiums.

Step Four: Receiving Payments
Once the claim is approved and the deferred period is over, payments will start. Normally the benefit will be paid monthly. For long-term policies, these payments can continue until retirement age or until the policy ends. For short-term policies, payments will cease at the end of the policy period (perhaps just 12 to 24 months).