Permanent health insurance provides a regular income for policyholders if they are unable to work due to accident or sickness.
It is available to both the employed and the self-employed. Most individual policies are paid free of tax up to a maximum prescribed amount based on the current declared income. PHI provided by a company is usually paid ‘gross’ and then taxed at the claimants appropriate rate.
The benefits, which can be level or inflation-linked, start after a ‘waiting’, or ‘deferred’ period, which is set when the policy is taken out. This can range from 4 weeks to 52 weeks.
Typically, the longer the deferred period, the cheaper the policy. The cost of a policy is also determined by your general state of health, age, occupation and the level of income required.
Once the benefits have started, they will continue until the policy expires, or the insured person returns to work or dies. In many cases a policy will have a fixed term, which is usually linked to the standard retirement age.