Overview
This is probably the most important cover that a trainee airline pilot can have. A relatively insignificant health problem, which would not stop a desk-based employee working, can result in loss of Licence. This cover is designed to pay out a lump sum if your Licence is lost permanently and smaller temporary benefits paid monthly during a period of temporary suspension, both after a waiting period. This waiting period is 180 days for permanent loss, but can be less at the insurer’s discretion. For temporary benefits the standard policy has a 365 day waiting period but if required this can be reduced to a waiting period of 180, or 90 days by paying an additional 5% or 7.5% of the premium, respectively. Whether you reduce the waiting period for temporary benefits, largely depends on your personal circumstances and how quickly you require income if you were unable to continue training, albeit on a temporary basis.

The insurance company
The cover is offered through Flightcrew Risk Solutions PCC Limited, a Guernsey based company. Specifically, the policy is issued through a cell in this Company named Cell BF4. This is a protected cell, in that other cells within the Guernsey based PCC cannot have an impact on the financial viability of the BFS cell. 

It has never been the intention of BFS to become an insurance company, but to provide continuity and secure the long-term future of the scheme BFS has owned Cell BF4 for a number of years. Recently the owner of the PCC indicated their intention to move out of this specialist market and to again secure members’ interests BFS has now purchased the PCC.

Even with household names, whilst the only name you see on the insurance paperwork is theirs, behind the scenes they may have covered all or part of the risk with re-insurers which is the case with the PCC. So whilst your dealings are with the insurance company, in the event of a claim it may be that a re-insurance company plays a large part in the claims process, and also the shaping of the terms of the cover offered. The re-insurance arrangements will change from time to time, and BFS will monitor the financial standing of the reinsurance support to the programme.

Restrictions on the amount of cover
The maximum you can insure for is the total cost of flight instruction fees, plus reasonable accommodation and living expenses, that you envisage incurring. Please note however, that the maximum pay out will be costs incurred up to the date of the claim, plus any qualifying costs that you are contractually committed to pay   

How the policy operates
This is an annually renewable contract, and at each anniversary the premiums increase to reflect that you have moved up to the next premium rate. The overall premium schedule itself may alter from time to time, usually as a result of the claims experience seen on the contract, but these changes have been infrequent. You will be advised in advance of the policy anniversary, on an annual basis, of the new premiums for the following year. You then have the opportunity to accept the new terms or ask for them to be modified.

Although this is an annually renewable contract, and the terms of the scheme can be amended by the insurers at renewal, no individual will be refused renewal solely on the grounds of ill health.

On successful completion of training, cover can be converted to a Flying Licence Insurance policy without further medical evidence, although this will be required if you increase the sum insured. After completion of training, the cover can be held for up to 12 months, and is then subject to review, unless you have obtained a job in the meantime. 

Claims
In the unfortunate event of an approved claim, if it is for temporary benefits then this will probably be paid on behalf of the insurer by BFS, whereas the insurer will pay a lump sum benefit direct. If you pay the premiums out of your own pocket, then under current legislation both the lump sum and the temporary benefits will not be subject to UK tax.

If you have been in receipt of temporary benefits and the temporary suspension then becomes permanent, the lump sum benefit will be reduced by the amount already paid. If however you return to flying, and later have a further claim for the same health condition, the sum insured will also be reduced. However, if you have returned to flying and then lose your licence as a result of an unrelated health condition the original sum insured would apply.

The temporary benefit amount is 2% per month of the sum insured, and in the event of a prolonged temporary suspension it is possible for the whole of the sum insured to be paid out over 50 months. Unlike some other policies, if you have received temporary benefits and subsequently return to flying, you will not be asked to repay the amount received.

Cost
The rates shown on the enclosed Policy Summary are completely pro rata, so it is relatively easy to work out the cost for any given sum insured. The current premiums for the standard policy are shown on the schedule exclusive of Insurance Premium Tax, although if you are non resident, this is not levied.

Application process
Please read this information in conjunction with the Policy Summary, the Keyfacts document, our notes on Insurance Protection, and download & complete our BFS Fact Find if you are a BALPA member and would like specific advice.

When completed and returned the Proposal Form and Direct Debit Mandate will need to be assessed by the underwriters based in Guernsey, and you will be advised when the policy is ready to start, although you can opt to have the policy start as soon as possible, assuming normal acceptance. If however you have an exclusion applied, we will come back to you, prior to the policy commencing, detailing the endorsements. If this is the case, say because of the ECG exclusion as you are not within the necessary time limits since your last test, this can be removed once the insurer has seen evidence that your next test is satisfactory. The completed Proposal Form and Direct Debit Mandate should be returned to BFS, and your cover will not be in force until we advise you that you have been accepted.

Your attention is particularly drawn to the importance of the Declaration and signatures on the Proposal Form. Any failure to disclose facts material to the insurance or any inaccuracies in your answers could invalidate the cover.

Benefits of BALPA membership
Premiums attract a discount for members, currently at just over 8.5% and is available all the time your membership is current. 

Regulatory environment
As the insurance company is based in Guernsey, they are regulated by the Guernsey Financial Services Commission.

It is our intention to provide you with a high level of customer service at all times, however, if you feel you have cause to be unhappy in any way with your insurance cover, in the first instance please contact Mr Peter Gilbert who will be pleased to assist you.
 
Contact details
All administration is carried out from the BFS offices, and any administration queries should in the first instance be addressed to Maxine Andrews on 020 8476 4087. Alternatively we have set up a dedicated e-mail address LOL@balpa.org .