Accident Sickness Insurance: Income Protection: Permanent Health Insurance

Accident Sickness Insurance: Income Protection: Permanent Health Insurance

Factfile: Sickness Insurance - Income Protection - Permanent Health Insurance

Brief Description:

Accident Sickness Insurance or Income Protection is known in the industry as Permanent Health Insurance PHI. Income protection pays an income to the policy holder when they cannot work due to illness or injury.

The income starts at the end of a pre requested illness waiting period which could be from 4 to 52 weeks. There are various waiting periods that are designed to fit in with pay you may receive from work or savings that you feel you could live on. The longer the waiting period, the cheaper the policy. This is because the insurance company do not have to pay out straight away and there is more chance that you will be able to return to work.

The policies normally pay out until you either return to work or you reach State pension age.

Accident Sickness Insurance policies are designed to pay you an income but they are also designed to give you an incentive to return to work. With this in mind, the maximum cover you can take out is 75% of your salary, less any State benefits to which you may be entitled. This normally reduces the cover to 50% or 60% of your salary.

Income Protection Insurance cannot be cancelled by the insurance company (although it can be cancelled by you). This gives you peace of mind to know that once cover is in place, it can only be cancelled by you. The premiums for Income Protection Insurance are set with reference to your occupation (amongst other things) so if you are a desk based administrator, your premiums are likely to be substantially less than a person of the same age and health but doing heavy manual work.

There are two types of Income Protection Insurance - Pure Protection and Unit Linked.

Regular premiums payable: Yes

Guaranteed Premiums Available: Yes

Reviewable Premiums Available: Yes

Life Insurance included: No

Critical Illness Insurance included: No

Income Protection Insurance included: Yes - Maximum normally 50-60% of gross salary

Period of Cover: Fixed Term, normally to a retirement date e.g. ages 55, 60, 65

Increase Cover option: Yes - can select a level income option or an increasing income option

Decrease Cover option: Yes, benefits can be reduced if you return to work in a reduced capacity

Waiver of Premium option: Not applicable

Lump sum pay out: No

Regular amount pay out: Yes, replacement income benefits start after specified deferred period. For example:

4 weeks deferred benefit - the most expensive cover
26 weeks deferred benefit
52 weeks deferred benefit

Any investment cash in value: For a unit linked plan. No investment in a pure protection plan.

Tax Benefits:

Private policies - Benefits are tax free
Business policies - premiums or benefits are potentially subject to tax incentives, not usually both

Benefits can be put in trust: No

Suitable For:

Adults - working - employed or self employed
Family Protection
Mortgage Protection
Business Protection

Insolvency Compensation Limits: Insurance Company Funds - 90% of total funds invested. No Limit.

Request expert advice today or visit our Money Shop or get a quotation and choose your own policy.