What is PMI?
No-one wants to think about a future in which we may suffer a debilitating illness- Unfortunately, many families are left in financial hardship when the main earner in the family is unable to work due to illness. Each year, around 650, 000 men over 40 are absent from work for than six months – for much of this period, there is no regular income available.
Permanent Health Insurance will provide you with a replacement income should you become ill or have an accident. Statutory Sick Pay, which is paid for up to 28 weeks by your employer, will not cover you for anything longer long term. After this period, you could claim incapacity benefit, although the government has gotten tough with this and to be eligible you will need to undertake a series of work-related tests.
Also known as Income Protection Insurance or Long Term Disability Insurance, Permanent Health Insurance (PMI) provides you with peace of mind should the unexpected occurrence.
How it works
There is often a waiting period before you receive your first payment – you will need to discuss this with your insurer, but is usually 4, 13, 26 or 52 weeks after you become ill, and is payable until the policy expires, or you return to work. A policy with a long waiting period will charge lower monthly premiums; if you choose the 4 or 13 week option, then you pay a higher monthly premium. After this time, you are paid a regular income, usually between 50 – 60% of your gross salary.
If you already suffer from an ailment, then you will probably be excluded from this in your Income Protection Insurance plan. You may even be required to have a medical examination. Always be honest in this part of the procedure as if you do not declare all your medical history a claim in benefit could be refused.
Income Protection Insurance policies often differ how they define a long-term illness. A drug or alcohol-induced problem, or anything else self-inflicated, will not be covered.
Also be careful of policies that state you must be able to perform any occupation before a payout is made. Making a claim on these Permanent Health Insurance plans is practically impossible – you will need to check your policy carefully – after all, you do not want any nasty surprises when you make a claim.
Things to know
If, following an accident or illness, you are able to return to work on a part-time basis, your insurance company may agree to pay you a reduced benefit. Again, check the small print carefully, or take advice from a financial advisor.
Consider also how long you wish to receive payments through your Permanent Health Insurance – the longer the payment period, the higher the premium.
Some insurers will ensure that these promotions are fixed for a period of time, but they could increase after this point, dependent on a review across their policies. This means you could end up paying further down the line.
In many of these plans, the insurers will guarantee that the monthly premium will not change – unless of course, you decide to change the parameters of your cover. For example, you may wish to increase or decrease the waiting period.
You can never be too sure what the future holds – get some Permanent Health Insurance to keep yours and your families minds at rest.