Income Protection & Private Medical Insurance
Protect your income if you are Self Employed or Employed.
The risk is clear – if you can’t work for a long period of time due to illness or injury, you could face a financial struggle.
If you could take out insurance – that pays you a monthly amount until you return to work – would the idea make sense to you?
Yes, of course it would.
Permanent Health Insurance (PHI) is also known as ‘income protection’ and can provide long term income protection in the event of an accident or sickness which prevents the policyholder from working.
PHI is not to be confused with Accident, Sickness & Unemployment cover (ASU) which also provides a more basic form of income protection.
The main difference:
Permanent Health Insurance (PHI) will potentially pay a monthly benefit for the full term of the policy or until the policy holder returns to work or dies.
eg: If a person with PHI cover over a 25 year term makes a claim in year 1, the policy could pay the monthly benefit for the remaining 24 years. If the policy holder returns to work, the monthly payments will stop but the cover will remain in place (provided the monthly payments are made).
The maximum cover is usually 60% of salary and there is no limit to the number of valid claims.
Accident, Sickness & Unemployment (ASU) Cover will only pay a monthly benefit for between 12 and 24 months. After the end of the benefit period or after the policy holder returns to work the policy will cancel and replacement cover will have to be arranged.
The maximum amount of cover is usually no more than 125% of the policy holder’s monthly mortgage or rental payment.
Accident & sickness cover can be purchased without unemployment cover for a lower cost and unemployment cover can be purchased as a stand-alone product. Unemployment cover may not be suitable for every one and income protection for self employed people needs careful consideration.
It is always advisable to seek income protection advice before making a decision.
Having the wrong cover could leave you paying for a policy that wont pay a claim.