Permanent Health Insurance is a policy designed to provide an income when the policyholder is unable to work due to ill health or accident.

The benefit is payable until recovery or until a chosen date which ever is earlier. It is subject to a deferred period which should take account of any benefits provided by the employer.

The benefit from a permanent health insurance policy is paid tax-free.

There is a wide range of insurance companies who offer a permanent health insurance policy.

The following criteria should be considered when selecting providers:

• Definition of disability
  • It is preferable for the company to provide an income should the policyholder be unable to follow their own normal occupation and not just any occupation with which they could cope.
• Indexation
  • The insurance company should offer an indexation option if it is necessary for the cover to increase in line with the RPI.
    
    (thus preventing the real value provided being eroded by inflation)
• Deferment Period
  • This refers to the period from ceasing to work as a result of illness or incapacity, to the time that the insurance commences payment of benefits.
    
    Most insurance companies offer periods of 4 weeks, 8 weeks, 13 weeks, 26 weeks and 52 weeks.
    
    Often employers will provide sick pay for the initial period.
    
    Benefits may not be payable until this period ceases.
    
    This should be taken into consideration when determining the most suitable deferment period on this policy.
    
    The longer the deferred period, the lower the premium will be.
• Flexibility
  • Insurance companies can offer waiver of premium, alternative retirement ages and partial benefits.
• Competitive Premiums
  • The premium required will depend on a number of factors such as age, level of benefit and period of deferment. A further factor affecting premiums is "occupation".
    
    The more manual or stressful the occupation, the higher the premium will be.

The broad occupational bands are:

• Non Manual
  • Accountant, Clerk, Draughtsman, Doctor, Secretary.
• Light Manual
  • Car Salesman, Chef, Hairdresser, Travel Agent.
• Skilled / Semi-Skilled with emphasis on Manual Duties
  • Baker, Butcher, Printer.
• Heavy Manual
  • Electrician, Window Cleaner, Driver, Metal Worker.

It is therefore apparent that not all permanent health policies are the same. With this in mind, expert advice and guidance is readily available from the Protection Team at Blevins Franks Mortgage Services, by telephoning on 08456 100 656 or by post / email via the 'Contact Us' page.