420 Start-Up IP version 7 Effective 06 March 2017
START-UP INCOME PROTECTION
Contents
1 What are your Start-Up Income Protection policy benefits?
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When will Sovereign pay a benefit?
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3
What amount will Sovereign pay for a benefit?
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4
What does totally disabled mean?
2
5
What is the Recurrent Disablement Benefit?
2
6 What happens when you have had your policy for three years?
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7
Policy transfer options
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8
Changing your sum assured
3
9
How to make a claim
3
10 Ongoing claim requirements
4
11 When will Sovereign cease paying a benefit?
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12 Exclusions – When Sovereign won’t pay a benefit
4
13 When can your policy be cancelled?
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Policy term
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When can you cancel your policy?
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When can Sovereign cancel your policy?
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14
5
Your premiums
15 Other important information
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What forms part of this policy contract?
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> Law changes affecting Sovereign or the policy
Sovereign Statutory Fund
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Policy subject to laws of New Zealand
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Notices
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Information about your policy
>
No surrender value
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Non-assignment of policy
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Complaints process
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16 Key terms
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1. What are your Start-Up Income Protection policy benefits? Your Sovereign Start-Up Income Protection policy can provide financial assistance in the event of total disability . Details of the Start-Up Income Protection Benefit (benefit) and the name of the life assured are shown in the schedule . The terms of your benefit are also contained in this policy. Provided your claim is accepted, Sovereign Assurance Company Limited (Sovereign) will pay the benefit to the policy owner.
3. What amount will Sovereign pay for a benefit? of the sum assured shown in the schedule . In addition, Sovereign will also pay any premiums due under this policy while a benefit is being paid. The amount that Sovereign will pay monthly is 1/12 th
4. What does totally disabled mean?
In Sovereign’s opinion, after considering the advice of a Registered Medical Practitioner and other relevant information, the life assured for the benefit is so seriously incapacitated by illness or injury that they are: > unable to follow the occupation or carry on the business they were involved in immediately before the disablement date for more than 10 hours per week; or > unable to perform the key income producing duties of the role they were involved in immediately before the disablement date for more than 10 hours per week; and > in each case, not in fact working, or engaged in any other business for reward, financial or otherwise.
Your policy commences from the risk commencement date .
To qualify for a benefit the life assured must be:
an owner of the business ; and
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actively involved in their business on the risk commencement date ; and
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> residing and working in New Zealand at all times during the policy term . In addition, the life assured’s business must be operating at all times during the policy term . At three years after risk commencement date , the provisions of Section 6 will apply.
5. What is the Recurrent Disablement Benefit?
The waiting period will be waived if in Sovereign’s opinion, after considering the advice of a Registered Medical Practitioner and other relevant information, the life assured becomes totally disabled again and this is caused by the same or a related illness or injury as the original period of total disablement, not later than 12 months after benefit payments related to the original claim ceased. The provisions in Sections 2, 3 and 4 will apply to any benefit claimed. All claims resulting from the same or a related disability will be considered to be the same claim in respect of the benefit payment period . 6. What happens when you have had your policy for three years? On the third anniversary of your risk commencement date , Sovereign will require you to provide financial accounts for your business (if you have not already done so) in order for the agreed value basis of your cover to continue. If you provide financial accounts, the provisions of your policy (including section 3) will continue to apply but Sovereign may change your sum assured based on your financial information. If you do not provide financial accounts, the provisions of your policy will continue to apply except that section 3 will be replaced by:
2. When will Sovereign pay a benefit?
Sovereign will pay a benefit if, in Sovereign’s opinion, at any time during the policy term , the life assured has become totally disabled and remains so for a continuous period greater than the waiting period .
In addition, the life assured must be:
> residing and operating their business in New Zealand immediately before becoming totally disabled ; and > actively involved in their business immediately before becoming totally disabled . The benefit is paid monthly in advance from the end of the waiting period until the life assured, in Sovereign’s opinion, ceases to be totally disabled , or until the occurrence of any one or more of the events set out in Section 11. Where the life assured has a waiting period of 8 weeks or less, is totally disabled due to injury and the nature of the injury is such that the life assured is expected to recover within a set period of time, Sovereign may choose to make a lump sum payment of up to 3 monthly benefit payments (after the waiting period and any offsets have been taken into account) and close the claim. This payment may be made during the waiting period . If the life assured is still totally disabled at the end of the expected recovery period corresponding with the lump sum payment, then Sovereign will reopen the claim and pay a benefit in accordance with the provisions of this policy.
The amount that Sovereign will pay monthly is the lesser of:
1/12 th of the sum assured shown in the schedule less offsets as described below; or
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8. Changing your sum assured
> 75% of the life assured’s pre-disability income less offsets as described below.
You may apply to Sovereign in writing at any time to increase or reduce your sum assured.
Offsets:
> Any other income replacement, rural income protection, business income protection, key person or mortgage protection benefits that any person receives or is entitled to receive from any sources in relation to the life assured and in respect of the same or a related disability (for example payments from ACC, Work and Income New Zealand (WINZ) or another insurer). − Where the life assured is covered by income replacement, rural income protection, business income protection, key person or mortgage protection benefits held with more than one provider, Sovereign will negotiate with the other provider(s) to determine the amount to be offset. − If the life assured is entitled to receive a benefit from ACC but is not receiving that benefit because the life assured has either not applied for the benefit, or has not provided all of the requirements necessary to assess the benefit, or the benefit has been stopped due to any non-compliance with ACC requirements, Sovereign will offset the full ACC entitlement regardless of whether the life assured is receiving a payment or not. > Any income before income tax, as a result of the life assured being actively involved in or actively carrying on business , other than passive income such as investment
Sovereign does not have to accept an application for any increase in your sum assured. Any acceptance will depend on a number of factors, including the state of health of the life assured. Any increase or reduction in your sum assured will start from the next premium due date after Sovereign accepts your application. Your premium will be recalculated based on Sovereign’s underlying premium rates at that time.
9. How to make a claim
For any claims enquiries, advice about submitting a claim or before incurring any costs in respect to a claim, please phone the Sovereign Claims Team or your Sovereign Registered financial adviser for assistance.
Sovereign Claims Hotline: 0800 500 108
Sovereign will tell you about any other information that may be required once notice of the claim has been received.
Sovereign is under no obligation to consider a claim unless all of the information requested is provided. Furthermore, Sovereign is under no obligation to assess or pay a claim prior to receiving notification. Sovereign may also ask you to undergo further medical examinations throughout the life of the claim. Any requests made by Sovereign for further medical information will be at our expense.
income, rental income or income earned by the business which cannot be attributed to the active involvement of the life assured.
> The life assured’s sick leave payments, subject to a maximum of 10 days’ sick leave payments for all claims resulting from the same or a related disability .
To make a Start-Up Income Protection claim, Sovereign will require:
In addition, Sovereign will also pay any premiums due under this policy while a benefit is being paid.
the life assured to be examined by a Registered Medical Practitioner acceptable to Sovereign, before accepting liability for a claim; and a Sovereign claims form completed by the life assured and a Registered Medical Practitioner (at your expense); and other information which Sovereign may reasonably request to help assess the claim, which may include evidence of earnings, taxable income , business accounts, Accident Compensation Corporation details or similar; and proof of financial information where applicable under Section 6; and the life assured to undergo medical and/or surgical treatment (including any operation or vocational, medical and/or social rehabilitation programme) at your expense which the life assured’s Registered Medical Practitioner or a Registered Medical Practitioner approved by Sovereign considers necessary; and any other information that Sovereign may deem relevant to the assessment of the claim.
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7. Policy transfer options
From one year after your risk commencement date you may apply to transfer to a relevant Sovereign Personal or Business income protection policy. Please Note : If you are able to transfer to an income protection policy and you have previously been on claim under your Start-Up Income Protection policy, the condition(s) that you claimed for may be excluded under the new policy. This means you will be unable to make any further claims for that/those condition(s). If you have any exclusions or loadings on your existing Start- Up Income Protection policy, these will also apply to your new Sovereign Personal or Business income protection policy, regardless of the benefit payment period you choose for that new income protection policy.
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10. Ongoing claim requirements
No monthly benefit payments will be payable retrospectively for any period of time before the date that the life assured subsequently complies with the relevant requirement(s).
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For ongoing claims Sovereign will regularly require: > Completion of a monthly medical certificate by a Registered Medical Practitioner (at your expense) and in a form from time to time approved by Sovereign for the purposes of determining ongoing entitlement to payment of a benefit. > Completion of a monthly individual declaration by the life assured in a form from time to time approved by Sovereign, which may include completion of daily activity logs detailing the life assured’s functional activities for the purposes of determining ongoing entitlement to payment of a benefit. > Proof of any remunerated or non-remunerated work completed by the life assured during the claim period. > Any other information that Sovereign may deem relevant to the ongoing assessment of the claim.
12. Exclusions – When Sovereign won’t pay a benefit Sovereign will not pay a benefit where any of the following directly or indirectly cause or contribute to the total disability : > The life assured deliberately injures himself or herself or attempts to do so. > The life assured engages in or is part of any conduct that is criminal. > The life assured does not comply with the treatment recommended by the attending treatment providers. > Pregnancy of, or childbirth by, the life assured, unless the disability lasts for more than 90 days after the end of pregnancy, in which case the waiting period will start from the 91 st day.
11. When will Sovereign cease paying a benefit?
Sovereign will cease paying a benefit if:
If the life assured is imprisoned for any reason, no monthly benefit will be payable during the term of imprisonment.
(a) The life assured fails to undergo and complete: - any surgical operation; and/or - any medical rehabilitation programme; and/or - any social rehabilitation programme; and/or - any vocational rehabilitation programme, which a Registered Medical Practitioner approved by Sovereign considers reasonably necessary. (b) The life assured fails to undertake any medical examinations that Sovereign requires the life assured to have, at our expense. (c) The life assured fails to comply with the requirements of Section 10 above. (d) Sovereign determines that the life assured is no longer totally disabled . (e) The benefit payment period expires in relation to the life assured. (f) The life assured or anyone acting on behalf of the life assured makes a false or fraudulent statement in respect of a claim or supports any claim with false evidence. (g) The life assured ceases to be actively involved in the business , unless the reason for this is related to the claim. (h) The life assured is in prison for any reason. (i) The life assured dies. If Sovereign ceases paying a benefit in accordance with paragraphs (a), (b) or (c) and the life assured subsequently complies with the relevant requirement(s), then: > The date that the life assured complied with the relevant requirement(s) will, subject to the provisions of this policy , be treated as the disablement date for a new claim. > The waiting period will be waived for the new claim. > The original claim and the new claim will be considered to be the same claim in respect of the benefit payment period .
13. When can your policy be cancelled?
Policy termination This policy will terminate and eligibility for the Start-Up Income Protection Benefit will cease for the life assured:
> At the expiry of the policy term for the life assured as shown in the schedule .
When the life assured dies.
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> If the life assured is no longer actively involved in the business for more than 60 days for reasons other than total disablement , unless Sovereign has been notified in writing and its written consent has been given for the continuation of the policy. > If the life assured sells his or her ownership interest in the business . However, if the life assured remains in the business as a key employee, you may apply to Sovereign in writing to continue the benefit. If the life assured is on claim and the reason for selling his or her ownership interest is due to the total disability of the life assured, the policy will remain in force until the life assured ceases to be totally disabled or the end of the benefit payment period, whichever is earlier. > If the business is wound-up or liquidated, unless Sovereign has been notified in writing and its written consent has been given for the continuation of the policy. However, if the life assured is on claim and the reason for the business being wound-up or liquidated is due to the total disability of the life assured, the policy will remain in force until the life assured ceases to be totally disabled or the end of the benefit payment period, whichever is earlier. > When the policy is cancelled by the policy owner.
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When can you cancel your policy? If for any reason you are not happy with this policy, you may return it to us within 15 days from the date your policy document is received. You will be deemed to have received your policy document three days after postage from Sovereign. Sovereign will promptly refund any premiums paid under your policy provided no benefit has been paid or any claim has been made. Alternatively, changes to your policy may be made and a replacement policy document issued. You can cancel your policy at any time by giving Sovereign notice in writing. If you pay your premium less frequently than monthly, we will refund any part of a premium already paid that relates to any period more than one month beyond the date of cancellation. Otherwise, Sovereign does not have to refund any part of the premium you have paid. You will remain liable to pay any premium due on the policy before Sovereign received the cancellation notice. You will not be entitled to any benefit under the policy from (and including) the date Sovereign receives notice of cancellation of the policy. When can Sovereign cancel your policy? Sovereign can cancel this policy if the premium has not been paid within 31 days of the premium due date . If Sovereign issues you this policy with the understanding that it is to replace a policy you already have then you must cancel your existing policy. If you fail to cancel your existing policy, Sovereign can cancel this policy or decline liability for any claims made under this policy. A Business Replacement Advice (BRA), application form, illustration or quote which indicates this policy is intended to replace an existing policy will be sufficient evidence that your policy was issued on the basis that you would cancel the existing policy. Sovereign can cancel this policy and decline liability for any claims made under this policy if you or any life assured, or anyone acting on your or any life assured’s behalf, makes a claim under this policy that is false or fraudulent in any respect. In the event that a false or fraudulent claim is established after payment of a claim, all amounts paid in relation to the false or fraudulent claim must be repaid by you to Sovereign.
Sovereign may, at its complete discretion either:
− subject to the Insurance Law Reform Act 1977, avoid your entire policy from its inception (this means the policy is deemed to have never existed); or − avoid from its inception any individual benefits provided by your policy (this means the individual benefit(s) are deemed to have never existed); or − alter the terms upon which cover is provided under your policy (such alteration of terms will be effective from the risk commencement date or such date of our choosing, at our discretion); or − remove from cover any life assured from inception but leave the policy in force for the remaining lives assured. If this policy is avoided or any terms altered or a life assured is removed from cover, we are entitled to retain all premiums paid in relation to the policy or that life assured.
14. Your premiums
To ensure your policy remains in force you must pay the premium on a regular basis as agreed with Sovereign.
The initial premium is shown in the schedule , the first payment is due to Sovereign on the first premium due date .
The premium amount may change from time to time (as described below) and you will need to pay the new premium on the agreed regular basis. Sovereign will advise you of the new premium before the change.
Change in premium amount Your premium will be recalculated at each anniversary date based on:
the age of the life assured; and
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the sum assured shown in the schedule ; and
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> Sovereign’s underlying premium rates at that time.
Method of paying premiums You must pay all premiums to Sovereign at its head office in New Zealand (see Section 15 for Sovereign’s address). Premiums are normally paid by direct debit or credit card. Alternatively, you can pay premiums by cheque. Premium payments are not effective until after they have been credited and cleared to Sovereign’s bank account. How will you know what to pay? Each year prior to the anniversary date, Sovereign will write to you and tell you how much the premium will need to be to maintain your existing cover.
Non-disclosure or the provision of false or misleading information
Any information you or any life assured gives us, and any information given to us on your behalf, must be complete, true and correct.
If Sovereign tells you that premiums need to increase to maintain your existing benefit amount, you can choose to:
If you or any life assured:
− fails to disclose material information to Sovereign prior to inception of this policy or any variation or reinstatement of this policy, or − has made a statement on the faith of which the policy was issued, renewed, varied or reinstated that was substantially incorrect .
> increase the premium to maintain the existing benefit amounts; or > reduce the benefit amount to the amount which your existing premium will cover.
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Other circumstances that can change your premium The other circumstances in which your premium will change are as follows: > When you increase or reduce the amount of benefit under the policy. > When the benefit ceases due to the life assured covered for the benefit attaining the benefit expiry age as specified in the schedule . > Any changes to the tax treatment of any premium payable or claims receivable in respect of the policy (such as changes to GST). What happens if you do not pay the premium on time? You have 30 days’ grace in respect of any premium due. Sovereign will be entitled to cancel your policy by written notice to you at your last known address if a premium remains outstanding 31 days after a premium due date . If you want to have the policy reinstated, you must write to Sovereign. Sovereign does not have to reinstate the policy but may do so on any conditions it considers appropriate. If a benefit is payable under the policy when the premium is overdue, Sovereign may deduct any overdue premium from the benefit.
Sovereign statutory fund Your insurance policy is part of the ‘Sovereign Statutory Fund Number 1’, effective 1 July 2013. This is a requirement under the Insurance (Prudential Supervision) Act 2010, for policy holder protection.
Policy subject to laws of New Zealand
The laws of New Zealand govern this policy.
Notices
When you write to Sovereign about this policy, you must send the letter to Sovereign’s head office in New Zealand or a substitute address Sovereign gives you .
The postal address of Sovereign’s head office is: Freepost Sovereign Private Bag Sovereign Victoria Street West Auckland 1142 New Zealand
The street address of Sovereign’s head office is:
Sovereign Assurance Company Limited Sovereign House 74 Taharoto Road Takapuna Auckland 0622 New Zealand
15. Other important information
What forms part of this policy contract? All the terms of this policy are contained in and based on:
Sovereign is not bound by anything contained in a letter or notice you send unless Sovereign actually receives the letter or notice at the relevant address. When Sovereign writes to you about this policy, Sovereign will send the letter or notice to the address for the policy owner shown in the schedule , or a substitute address you give us. You must immediately notify Sovereign of any changes to your postal or residential address. Every notice required to be given to you by Sovereign shall be deemed to be delivered three days after having been posted. Information about your policy Shortly before the expiry date , Sovereign will send you a letter outlining the continuation options for this policy. Please contact your Sovereign Registered financial adviser to discuss new cover options. You may at any time write to Sovereign or your Sovereign Registered financial adviser for further information about your policy.
> This policy document including the schedule and any alterations made to this policy document as permitted under the policy. > Any application forms and declarations made by you , at any time, concerning this policy. > All statements which anybody who is insured under this policy has made to Sovereign. > Any provisions which any legislation states must be included in this contract, unless those provisions can be contracted out of, in which case they are deemed not included.
Nothing else forms part of this contract.
Law changes affecting Sovereign or the policy If changes in the law occur after the risk commencement date and Sovereign believes on reasonable grounds that those changes will affect:
Sovereign’s liability to pay any tax; or
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> the tax treatment of any premiums payable or claims receivable in respect of the policy; or > the way in which the policy works or the amount which can be paid under the benefit;
No surrender value
This policy does not participate in the profits of Sovereign. The policy has no surrender value or cash value if it is cancelled.
then Sovereign can change the provisions of the policy, but only to take into account the effect of the law change.
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Transfer of Ownership You may transfer ownership of your policy at any time. To be valid the transfer must be on a transfer of ownership form and registered with us. If ownership of your policy has been transferred, references in this policy document to you , your and the policy owner(s) are references to the most recent transferee(s).
(whichever is stated in the schedule ) is the total period for which benefits will be payable for all claims arising from the same or a related cause illness or injury.
business
The business of the ‘Policy Owner’ named in the schedule .
Complaints process
disabled/disability
The illness or injury giving rise to the claim for total disability .
Complaints should be made to Sovereign in writing in the first instance. If you are not satisfied with the outcome of the complaint, you may have the right to refer the complaint to the Insurance and Financial Services Ombudsman. The Ombudsman can only deal with a complaint after Sovereign’s internal complaints procedure has been exhausted and a letter acknowledging this has been sent to the complainant.
disablement date
The date the life assured became totally disabled .
The date shown in the schedule.
expiry date
income
Any income that the life assured receives or is entitled to receive from his or her current or former employment or business (es). This includes:
You can obtain more information about the Ombudsman from the website: www.ifso.nz
The Ombudsman’s address is:
The life assured’s share of profits of the business (and/or any associated entities), after the deduction of business expenses, which are determined in line with the usual manner that profits and/or losses of the business (and/or associated entities) are divided between the life assured and any co-owners, partners, shareholders or beneficiaries of the business (and/or associated entities); and Any other remuneration, whether in the form of salary or wages, superannuation, director’s fees, allowances or any other monetary or non- monetary benefit, the life assured receives or is entitled to receive directly or indirectly from his or her employment or the business .
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Insurance and Financial Services Ombudsman PO Box 10-845 Wellington 6143 Phone: (04) 499 7612 or 0800 888 202
16. Key terms
Some words in this policy document have special meanings:
actively involved
Working an average of more than 30 hours per week in the six months prior to the disablement date , inclusive of any periods of approved leave.
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anniversary date
The anniversary in each year of the first premium due date.
The maximum term for which the Start-Up Income Protection Benefit is payable as stated in the schedule. The benefit payment period commences at the end of the waiting period and ceases either 6, 12 or 24 months (whichever is stated in the schedule ) later or when the life assured reaches the end of the benefit term as stated in the schedule , whichever is the earlier.
benefit payment period
The current year’s taxation liability excludes any tax losses which have been brought forward from previous years. A statement is material only if that statement would have influenced the judgement of a prudent insurer in fixing the premium or in determining whether they would
material
The 6, 12 or 24 month period
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have taken or continued the risk upon substantially the same terms.
what is actually correct would have been considered material by a prudent insurer
operating
the schedule
The usual day-to-day activities of the business in order to produce necessary cash flow, to pay its expenses and debts and remain solvent.
The most recent schedule for your policy and: - any notice of a change to premiums ; and - any policy alteration or
endorsement documents recording a change to your policy
person
An individual, employer, company, partnership, association, organisation or trust.
totally disabled
See Section 4 of this document for the meaning of this key term. Total disability and total disablement have corresponding meanings. Sovereign’s standard form for an assignment of a policy by way of ordinary transfer.
policy illustration
The Sovereign Start-Up Income Protection illustration enclosed with this policy document.
transfer of ownership form
policy term
The maximum term for which the life assured is insured for as stated in the schedule .
waiting period
The period stated in the schedule for which no benefit is payable.
pre-disability income
The average monthly income earned in the 12 months immediately prior to the disablement date . The amount payable by you to Sovereign under this policy, comprising the cost of the benefits chosen by you , plus the policy fee, if any. The date on which the premium is payable under the policy, as agreed with Sovereign. A person , acceptable to Sovereign, who is registered and practicing as a medical practitioner in New Zealand other than:
you/your
The 'Policy Owner' named in the schedule.
premium
premium due date
Registered Medical Practitioner(s)
you ;
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the life assured;
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a member of the life assured’s family or your immediate family; the life assured’s or your business partner or associate.
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The commencement date of the policy, being the date on which the policy was issued.
risk commencement date
A statement is substantially incorrect only if the difference between what was stated and
substantially incorrect
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