Anyone who does not get paid by their employer indefinitely, when they are off sick from work, should seriously consider the protection a Permanent Heath Insurance (PHI) policy affords.
The savings people have to fall back on, usually only amount to enough to cover their everyday outgoings for a couple of months at best! After this time the outlook becomes far less predictable, so this is where a PHI policy can give you real peace of mind.
Long-term illness is something we prefer not to think about but, in the most recent National Census it was found that, one in six people in the UK (10.3 million)
reported having a limiting long-term illness (LLTI)*. Many suffer financial hardship as a result.
If you are an employee and unable to work because of illness, you may be able to get Statutory Sick pay for up to 28 weeks. But the standard rate is around £80.00 a week.
You can argue there is a greater need for self-employed people to have a PHI policy in place, as if they don’t work they won’t have an income from day one. This makes the need for PHI much greater in order to maintain lifestyles.
PHI helps replace lost income if you suffer disability or a long-term illness. Critical illness cover is a different type of insurance. It pays out for specific illnesses such as cancer, heart attack, stroke, etc.
Although the majority of people have life insurance to cover the event of their death, far fewer insure
themselves against loss of income through illness. Yet protection against ill-health is far more necessary for most people than life cover.
PHI is called ‘permanent’ because the insurer may not cancel the policy, no matter how often you claim for benefit, although policies usually expire when the policyholder reaches 65.
How sick is sick?
Insurance companies have different definitions of what constitutes long-term illness, but you can be confident that it’s not enough just to feel a little under the weather! Usually to trigger the policy’s benefits you must demonstrate that you’re unable to follow your usual occupation as a result of sickness or accident.
PHI plans allow the planholder to select how long after they suffer an illness or a disability they want their specific plan to start providing income replacement. This may be as soon as four weeks (generally for the self-employed), 13 weeks, 26 weeks or even a year. The shorter the “deferment period” on a plan, the higher the premiums will be.
You can opt for cover that provides an income which increases at a pre-determined rate each year. But this costs more than a policy that offers a level rate of income. When the plan is paying benefits, premiums are normally waived. You will only start paying them again once you return to work.
Make the leap to a better PROTECTED life!
*Source: Census 2001, Office for National Statistics.