Permanent Health Insurance (PHI) – Income Protection

PHI or Permanent Health Insurance can be set up in lots of ways to benefit a persons particular circumstances. Different ‘deferred’ periods will alter the cost and certain occupations are viewed differently by insurers.

We have access to advisers who can compare PHI cover from the whole market to pinpoint the most suitable solution that not only provides the right cover but also at the right price.

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About Permanent Health Insurance

Permanent health insurance (PHI) is also known as income protection.

Claims are paid as regular monthly amounts to replace a proportion of your income if you are unable to work for an extended period of time due to disability or long-term illness.

Benefits from the Government are minimal and Statutory Sick Pay is currently a meager£81.60 per week or £353.60 per month which is barely enough to feed a family of 4 let alone pay the mortgage, heating and electricity bills or any other loans etc.

Most PHI policies will allow you to make as many claims as you require, within the term of the policy, provided the circumstances are legitimate.

There are many permanent health insurance plans available from a wide range of companies, with premiums varying according to the amount of cover required.

How much cover can I have?

The average maximum amount of cover available is 60% of your earnings (some insurers only offer cover for 50%), less State benefits.

What if I get sick pay from my employer?

Claims for Permanent Health Insurance can be delayed to coincide with employer sick pay. This is called a ‘deferred period’.

For example, if you receive full pay from your employer for 6 months it is possible to delay the payment of a claim for 6 months. This will keep the cost of cover down.

It is not possible to receive payments while you are in receipt of employer sick pay if the total amount you will be receiving exceeds 60% of your total income (50% with some insurers).

Therefore if you will receive employer sick pay for 6 months it is important to set the deferred period at 6 months otherwise you may be over insured and not able to claim straight away.

You do not have to receive employer sick pay in order to choose a deferred period for cover. Deferring the cover can reduce the cost quite considerably so if you have the means to survive for a few months, cover can be deferred to suit.

Deferred period options range from:

  • 0 weeks
  • 1 week
  • 2 weeks
  • 4 weeks
  • 8 weeks
  • 13 weeks
  • 26 weeks
  • 52 weeks
  • 104 weeks

Not all insurance companies offer the complete range but most offer 0, 4, 8, 13, 26 & 52 week options.

How much does it cost?

The price will be based on the length of time the cover is in place and the amount of cover.

Permanent health insurance is underwritten in the same way as Life Insurance and so it will cost more if you are a smoker, have any pre-existing medical conditions or work in a high-risk industry.

What if I am made redundant?

Some income protection policies can provide cover in the event of redundancy. These plans are often referred to as accident, sickness and unemployment (ASU). These plans generally only pay out for a maximum of one or two years whereas Permanent Health Insurance claims may pay out for many years and possibly even until the policy holder reaches 65.

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