Permanent health insurance advice
Permanent Health Insurance (PHI) is also known as Income Protection Insurance (IPI). Its purpose is to provide financial protection for an individual and his or her family in the event of long-term disability or incapacity due to accident or illness. The monthly income will normally come into payment after a deferred or waiting period has elapsed following the start of incapacity. The income will normally be paid until the individual recovers sufficiently to resume work, retires or dies (whichever comes first).
Typically, the maximum level of income cover that an insurer is prepared to provide is up to 50% of an individual’s income less any State Incapacity Benefit that would normally be payable. This restriction provides a financial incentive for the policyholders to go back to work, if possible. The definition of incapacity for the purposes of this form of insurance differs from one insurance company to another. The income benefit is free of tax, as long as the individual insured has paid the premiums. If an employer pays the premiums, then the benefit is immediately treated as taxable income.
