Continued guaranteed income on leaving employement?
By now, everyone is familiar with the individual continuation of group hospitalisation insurance facilitated by the Verwilghen Act (1 July 2007). The group policy through the employer is terminated if an insured employee is dismissed, retires or dies (or if a child who is no longer a dependant dies) and those involved can take out a new policy in their own name. If this conversion occurs at the same insurer, the exemption from insurance tax and medical acceptance will be granted under certain conditions.
Yet the same Verwilghen Act also states this individual continuation must be possible for occupational disability cover if the employee loses the benefits of the group policy on leaving their employment. This possibility was not publicised much in practice because few insurers offered such products to wage earners. The scope of application is also narrower than for hospitalisation insurance, because a ‘guaranteed income’ policy serves to compensate the loss of earned income if illness or an accident occurs and therefore also requires a stable income. People who are unemployed temporarily (‘in between jobs’) or for a longer period become dependent on unemployment benefits and consequently cannot take out such a policy.
The individual continuation of a guaranteed income policy can thus become interesting when switching to a new employer that does not offer a group invalidity policy. To avoid medical acceptance, it is moreover best to have been covered by the group policy for an uninterrupted period of two years (whether or not through the same insurer).
We also strongly recommend that wage earners who switch to self-employed status take out appropriate occupational disability insurance because statutory allowances for the self-employed are wholly inadequate to maintain their standard of living.