Permanent Health Insurance

For most of us it takes a life changing event, whether it is a new house or bringing a new person into the world to consider our financial protection.

Permanent health insurance can offer peace of mind knowing if you are unable to work for a prolonged period due to illness or injury a proportion of you income will be available to to meet your monthly financial obligations.

Finding the best deal when it comes to a permanent health plan is like finding any other cheap insurance, you must have a good basic knowledge of what is available and ensure you shop around.

Start by searching the web to gain an understanding of the insurers, their products and the cover provided. By asking a variety of insurers to quote you ensure a competitive price.

Each insurer has their own underwriting calculations which means one insurer may well look upon you in a more favourable than another and offer you better premiums

For information regarding the regulation of the insurance market visit the Financial Services Authority website.

The FSA also provide a site to help consumers with money and insurance matters, an overview of income protection insurance can be found in their insurance section.

As with many other policies permanent health insurance premiums are dependant on a number of personal factors and cover options you choose. Personal factors which the insurers consider include your age, your occupation, whether you smoke and any pre-existing conditions.

With increasing age comes the increased likelihood of being off work for a prolonged period of time due to illness or injury. Insurers take this into account when quoting and thus the older you are the higher your premiums will be.

The risks associated with smoking are clear enough for us all to see. Most insurers deem any person who has smoked tobacco in the past 12 months as a smoker and in turn quote inflated premiums to account the additional risk.

As the policy is designed to cover your monthly income it should come your occupation is considered a risk factor for the insurer.

The greater risk you occupation imposes on the insurer, whether it be stress or physical exertion the more likely your occupation could require prolonged periods off work and the more expensive your cover.

The more risky your occupation, whether it be stress or physical exertion the more likely your occupation could require prolonged periods off work, thus the more expensive the policy cover.

Pre-existing conditions can affect the premiums quoted and the cover provided by the policy, failure to disclose a condition could result in your policy being void.

What would be the financial impact on you and your loved ones if you were to become seriously ill and unable to work? Would their be enough income and/or savings to cover your financial obligations and avoid financial hardship?

A permanent health plan can offer you peace of mind knowing it will pay out a tax-free monthly income directly to you if you are unable to work long term due to sickness or injury.

Permanent health insurance is designed to cover long term sickness or injury. If you are looking for a policy to cover you in the short term i.e. 12-24 months then there are alternatives.

To protect a specific debt such as a mortgage in the short term, if you are not working due to either accident, sickness or unemployment you should consider an accident, sickness and unemployment policy as an alternative to the long term protection a permanent health insurance plan provides.

Permanent health insurance can provide a tax free monthly income of between 50% and 65% of your taxable income, although some providers will offer up to 75%.

You can choose the length of cover your policy provides monthly payments should you need to claim. At the outset of your cover you will decide on the benefit period, it can be for as little as 2 years, 5 years or even until retirement.

Choosing a benefit period of 2 years means if you need to make a claim the plan will pay out for a maximum of 2 years if you do not return to work during this period.

Guaranteed premiums ensure your premiums remain fixed for the duration of the policy. If you opt for reviewable premiums the insurer has the right to assess the risk associated with your cover every 2 to 5 years and adjust the premiums accordingly.

At policy commencement guaranteed premiums will be higher than those of a reviewable plan however over time guaranteed premiums tend to work out cheaper as the premiums are guaranteed not to increase over time.

A deferred period is the time period from which you are initially off work due to illness or injury to the point where your policy will start paying you a monthly benefit.

When choosing a plan you have a choice of deferred period which range from as little as 4 weeks up to 52 weeks. As expected the longer the deferred period, the cheaper the premiums.

Own occupation definition means that the permanent health insurance will payout if you are unable to work in your own occupation due to sickness or injury, where any or suited occupation definitions are only likely to pay out if you are unable to do any sort of paid work.

An optional extra which ensures your income protection cover increases with inflation during the term of the policy.

The amount of cover will increase in line with the retail price index(RPI) thus the real value of the payments will keep increasing in line with inflation over time