Permanent Health Insurance or Income Protection is designed to pay you a regular tax free monthly income if you are incapacitated and unable to work due to illness or injury. The amount of cover is based on a percentage of your gross earnings and is suitable for both employed and self-employed people. There is no limit on the number of claims you can make and if you are never able to work again it will be paid until your selected retirement age (Max 65).

Who can benefit from taking out PHI cover?
Anyone who does not get paid by their employer indefinitely when they are off sick from work should consider a PHI policy, most people would not be able to maintain their standard of living if they had to rely on benefits from statutory sick pay and incapacity benefit therefore PHI could form a akey part of their financial protection needs.The need for PHI is not merely limited to those people who are employed, self employed people for instance if off work due to illness or injury would not receive any benefits from their employer so in actual fact the it could be argued that the need fpr PHI is greater for self-employed people.This makes the need for private insurance provision much greater in order to maintain your lifestyle.

In what way does it differ from Accident, Sickness and Unemployment cover?
Permanent Health Insurance policies (PHI), and Accident, sickness and Unemployment policies (ASU) are both designed to replace a person's income should they become incapacitated and therefore be unable to work, it should remembered that there are some major differences between the two types of cover which should be borne in mind.

Permanent Health Insurance cover (PHI) or Income Replacement policies are designed to provide the policyholder with a replacement income in the event of a long-term sickness or disability. Payments are usually made when the policyholder cannot undertake  their own or any job due to illness or injury ( it is also worth pointing out that in the majority of cases cover should be sought that protects your own occupation rather than any).

Accident, Sickness and Unemployment (ASU) policies will also protect a person's income against illness or injury. However, the main point of difference is that it will also protect a person's income if they were made redundant by their employer. Some ASU policies will also allow you to choose whether you want to receive benefits for accident and sickness only, unemployment only or all three.

PHI will pay out a guaranteed level of income every month for as long as your incapacity continues; if necessary until your 65th birthday or when you retire. Normally, there is a maximum benefit payable from such a policy; this is usually 65% of a person's annual income, less any benefits that they are entitled to from their employer and the state, it is important to remember this benefit is paid tax free.

ASU benefits are usually payable for a maximum of 12 months. However, some will pay the benefit for up to twice this, it all depends on the insurer. With ASU you are able to choose the amount of benefit you would like to receive within certain limits for the maximum amount. The premium will be calculated as a percentage of the amount of monthly benefit you would like to receive and hence the higher the amount of cover you would like the higher the associated premium costs.

So long as the claim is legitimate a PHI policy can pay out a number of times and the insurer cannot cancel the policy as long as premiums are maintained. Depending on the premium that you're prepared to pay, the monthly payments can be linked to the Retail Prices Index (RPI). This means that they automatically keep pace with the cost of living a process known as 'inflation proofing'. ASU policies will only allow a singular claim at which point the policy will be cancelled, meaning you need to re-apply to set up a new policy. You do not have the option of 'inflation proofing' such a policy. The benefit, once chosen, is fixed and if you wish to increase it then you must apply again for a new policy with a new benefit. 

Should I consider this type of policy to cover my mortgage?
Accident, Sickness and Unemployment insurance (ASU) will cover you for 12 months with immediate effect from when you are off work due to an accident, becoming too sick to work or becoming unemployed.
If you return to work the policy can end and the benefit will stop. The insurer has the right to cancel the policy at any time and it is reviewable and also renewable on an annual basis. This means the insurer can cancel or increase the premium at the annual review date.

There is no deferment period from which the benefit can be taken and in some cases if you receive any employer sick pay you will not be entitled to the ASU benefit until the employers pay stops. It could also be argued that another drawback of ASU is that you can only cover a percentage of your mortgage monthly repayment plus some additional costs (which will vary from insurer to insurer). This means that while your mortgage payment is covered, you may not be able to cover all of your monthly outgoings.

Permanent Health Insurance (PHI) has a much broader long term outlook regarding its protection of your mortgage repayment. The product is flexible, incorporating a deferment period from when the benefit will start to be paid. This enables people who have employer's benefits the option of a lower premium if they wait a certain period of time before the insurance company begins to pay out.

The main advantage of the Permanent Health Insurance over Accident, Sickness and Unemployment cover is the fact that PHI will pay out over a longer term, until they return to work or their designated retirement age. This will ensure that mortgages can be covered over the long term.

The maximum benefit that can be covered per month is usually 65% of gross income, less any state benefits that the policy holder may be entitled too. This enables policyholders to cover both the mortgage repayment and any other bills that they may have.

The PHI cover cannot be cancelled by the insurer, even after a claim has been made, meaning that some form of cover will always remain in place.

Permanent Health Insurance is a more prudent long term option for protecting your mortgage repayments. Not everyone will recover within 12 months of becoming ill and be able to return to work and therefore PHI cover will ensure that these people can maintain a standard of living similar to that of when they were working.

What about my occupation and the premiums to PHI?
The likelihood of accident or illness varies depending on what occupation you do, and premiums will vary to reflect this. For example, a roofer may pay a higher premium than an office clerk due to the higher risk nature of the job. However there are specialist providers who do not charge you more for having a higher risk occupation, and therefore they may be more suitable for you. As we offer independent advice, we are able to search the market for you and place you with the most suitable provider for your occupation.

What are Deferred Periods?
A deferred period could also be called a waiting period. It is the period of time that you need to be off work due to illness or accident before your Income Protection Policy begins to pay out. This time period is selected by each individual and is normally dictated by the sickness benefits that your employer provides. Thus if your are Self Employed or receive no sickness benefits from your employer, then you will usually require a very short deferred period .Deferment periods can range between 1 day and anything up to 24 months dependent on an individuals circumstances, it is important to bear in mind that the shorter the deferment period the more effect it will have on increasing premiums.

What affects the premium I pay?
There a number of things which can affect the premium you may pay these are such things as:-
Age, sex, health, occupation, deferment period, benefit required and indexation.

For Accident, Sickness & Unemployment Cover we usually offer products from a selected panel of providers