If you were unable to work through sickness or injury permanent health insurance would you pay for your weekly shop. How else could you pay that or your mortgage or rent?
Facts & Figures recommends Permanent Health Insurance (PHI) which is designed to provide income replacement if someone is unable to work due to ill health or injury. It pays out after an initial deferred period until the earliest of recovery, plan expiry (typically set to retirement age) or prior death.
The maximum permanent health insurance cover that can be provided is typically 60% of pre illness income – as insurers want to make sure that malingerers have a reason to return to work!
There are various definitions of ill health, usually related to an inability to perform the activities of your own, a suited, or any occupation. We only ever quote on the best, “own occupation” which means that if you are ill and unable to pursue your own occupation an insurer would pay out. “Suited” or “any occupation” definitions of illness are cheaper but at Facts & Figures we generally recommend against these.
Permanent health insurance (PHI) premiums can be guaranteed or reviewable; guaranteed premiums are fixed at outset while reviewable premiums are likely to increase over time. However if you select a reviewable contract and the premiums increase excessively, subject to insurability we can go to another provider.
It is possible to have permanent health insurance (PHI) benefits indexed pre claim i.e. each year your premiums and the initial level of cover on your plan would increase. However there would be a small additional premium for this.
Benefits can also be increased in claim, in other words irrespective of the initial level of benefit, once in payment the monthly payment can be set to increase annually.
PHI pays out after an initial “deferred” period this is how long you would have to be sick for before you got any benefit. We find for most self employed people 3 months is about right. But you can have a shorter and more expensive deferred period or a longer and cheaper one…
Once you qualify for a claim, payment will continue until the earlier of recovery, death or expiry age. An earlier expiry date results in a cheaper premium.
Contact Us at Facts & Figures now for further information on permanent health insurance.
We are permanent health insurance experts based in central London.