Have you ever given any thought how you would cope financially should you be unable to work due to illness or injury. How would you manage to meet your mortgage payments and other essential household bills?
Income Protection insurance or Permanent Health Insurance (PHI) as it was known as, is an insurance policy that will pay you an income if you cannot work through illness or accident, after a defined waiting period of either 4, 13, 26 or 52 weeks, obviously the longer the waiting period, the cheaper the monthly premium.
It is called 'permanent' because the insurer may not cancel the policy, no matter how many times you claim for benefit.
The benefits provided by the government in the event of sickness are low in value, and would not keep you to the standard of living you are used to. Most State Benefits will be gone after paying the bills and any debts, leaving you to struggle to buy basic food items and clothes.
The Self Employed have the greatest need for PHI, as if they do not work, they will not have an income from day one.
Anyone who is employed and only recieves Statutory Sick Pay (SSP) should also consider the benefits of PHI. Remember that SSP is only payable for 28 weeks, after this period claimants must undergo a test checking thier ability to carry out a range of work related activities.
Because the aim of PHI policy is to replace earnings lost through sickness or injury without reducing your financial incentive to return to work, all policies set a maximum income benefit level, most are between 50% to 60% of gross salary plus any state benefits that would be payable. Benefits from PHI are tax free.
Insurance companies will ask you which definition of incapacity you require. The main areas to consider:
For more information on how to protect yourself, please feel free to contact me for a no obligation quotation.
North East Mortgages - Mortgage Brokers and Protection Advisers are 'Whole of Market' advisers, so we can look at all the main providers who are active in this market, and produce you with the most competitive quote.
Please contact us for your free no obligation quotation.