The Disability and Disability End Special Events work in conjunction with the person’s Employment and any Income Protection policies they may have within the plan.
The Disability Event stops any Income for that person (the owner of the Event) and pays out any Income Protection entered for them. The Disability End Event starts the Income again and stops Income Protection payments.
Entering Income Protection/ Disability Policies
Enter an Income Protection policy by selecting the ‘Plus Button’ in Dashboard - Select Protection/Insurance - it is called Income Protection or Disability depending on your region.
Ensure you select the Owner of the policy.
- Insurance Type - If the cover is provided by an employer and the Insurance Type set to Employee, link it to the related income (using the Linked Employment). Once linked, the policy will inherit the start and end events from the employment source - i.e. the policy will be active until the individual retires.
- Coverage Type - Choose either Percentage of Income or Fixed Amount and then complete the amount of Coverage.
- Benefit Duration – The maximum number of years benefits could be paid once the owner has become disabled. This can either be a Fixed Number of Years or End of Linked Employment.
- Protection Cover - Edited in the Timing screen using start and end events. This gives when the Protection starts and ends and therefore when the Protection is active.
For active policies, benefits will pay-out annually until:
(a) the disability ends event (the Heart icon),
(b) the benefit duration is exceeded,
(c) the policy is no longer active,
…whichever happens first.
Note: We only ask that a benefit duration be specified in order to provide users a number of different options when entering these policies. If there are no real limits on the number of years a policy could pay benefits – i.e. the policy is active and could pay benefits if I were disabled today, from now until the coverage period ends – simply enter a ballpark figure (20 years for example). Pay-outs will still be limited by the end of the disability, or the end of the coverage period, whichever happens first.
Modelling Income Protection Policy pay-outs
Pay-outs from income protection policies are triggered by the special Disability and Disability End events, found on the Special Events palette as shown below:
If you want to model the pay-out from an income protection policy (usually this would be done in a what-if scenario), go to the Timeline and double click to add an event. The Events panel will appear. Check the policy owner. Select the Disability Special Event and select the year in which the Income Protection pay-out is being scheduled to occur. You can also add a separate event onto the Timeline for when the Disability Ends.
The Income protection payments will begin and employment income will cease at the Disability event. Payments from these policies will end either at the Disability Ends event or when the term of the policy ends, whichever happens first.
If Disability End is positioned prior to one's Retirement event (or prior to any alternative event used to set the end of an employment income), then the income will begin again at the recovery event.
Note: Income protection cover as an employment benefit (a policy linked to one's employment) will end with the employment income's end event, which is normally set to end at the earner's Retirement. Consider this event the normal planned retirement age. The income itself will cease, at least temporarily, at the Income Protection event. Be sure not to move Retirement or whatever event is being used to mark the normal retirement age earlier in the plan unless you intend to use it to end employment linked income protection benefits.
To view the pay-out from the Income Protection policy, go to the Cash Flow tab in Year View, move the slider to the year/age in which the Income Protection is scheduled.
Pay-outs can also be seen on the Protection tab.