In short
Incapacity is the test an income protection policy uses to decide whether your illness or injury prevents you from working and qualifies for a claim.
Income protection policies pay out when illness or injury leaves you unable to work, and incapacity is the definition that decides whether your situation qualifies. The definition set out in your policy determines how easy or hard it is to claim.
The most generous definition is own occupation, which assesses whether you can do your own job. Other definitions, such as suited occupation or activities of daily work, are based on whether you could do another job or perform certain tasks, and are generally harder to meet.
Because the incapacity definition has such a direct effect on claims, it is worth checking which one a policy uses before you buy. A cheaper policy with a stricter definition may be harder to claim on when it matters most.
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