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welcome to Income Protection
The last thing that you would want in the event of illness is that your income stops; its bad enough that you are sick, but to be sick & risk everything you own would be devastating, thats why income protection insurance was created.
Mortgage payment protection insurance (MPPI)
This sort of cover is designed to help meet your mortgage payments if you're off work for a long time because of an accident or sickness. Many people will add unemployment cover to this to ensure that their mortgage payment is covered in the event of redundancy. This is also known as Accident, Sickness and Unemployment (ASU) insurance.Each policy varies, but most provide cover for up to 12 months
Permanent Health Insurance
Permanent Health Insurance policies (PHI), and Accident, sickness and Unemployment policies (ASU) are both designed to replace a person's income should they become incapacitated and therefore be unable to work. There are several fundamental differences between the two plans, which should be noted
Permanent Health Insurance cover (PHI) or Income Replacement policies are designed to provide the policyholder with a replacement income in the event of a long-term sickness or disability. Payments are usually made when the policyholder cannot undertake their own job due to illness or injury.
Accident, Sickness and Unemployment (ASU) policies will also protect a person's income against illness or injury. However, the main point of difference is that it will also protect a person's income if they were made redundant by their employer. Some ASU policies will also allow you to choose whether you want to receive benefits for accident and sickness only, unemployment only or all three.
PHI will pay out a guaranteed level of income every month for as long as your incapacity continues; if necessary until the day you hit 65 and officially retire. Normally, there is a maximum benefit payable from such a policy. This is usually 65% of a person's annual income, less any benefits that they are entitled to from their employer and the state.
ASU benefits are usually payable for a maximum of 12 months. However, some will pay the benefit for up to twice this, it all depends on the insurer. With ASU you are able to choose the amount of benefit you would like to receive within certain limits for the maximum amount. The premium will be calculated as a percentage of the amount of monthly benefit you would like to receive and hence the higher the amount of cover you would like the higher the associated premium costs.
PHI policies can never be cancelled by the insurer and most will allow you to make as many claims as you require, so long as the circumstances are legitimate. Depending on the premium that you're prepared to pay, the monthly payments can be linked to the Retail Prices Index (RPI). This means that they automatically keep pace with the cost of living a process known as 'inflation proofing'.
ASU policies will only allow a singular claim at which point the policy will be cancelled, meaning you need to re-apply to set up a new policy. You do not have the option of 'inflation proofing' such a policy. The benefit, once chosen, is fixed and if you wish to increase it then you must apply again for a new policy with a new benefit.
ASU policies will only allow a singular claim at which point the policy will be cancelled, meaning you need to re-apply to set up a new policy. You do not have the option of 'inflation proofing' such a policy. The benefit, once chosen, is fixed and if you wish to increase it then you must apply again for a new policy with a new benefit.
For further information on the differences between a number of different Income Protection polices just contact one of our advisors.
We will search the UK market for Permanent Health Insurance cover on your behalf to try to save you time, money and the most suitable product for your circumstances.
On completion, there MAY be a fee for mortgage advice. The precise amount will depend on your
circumstances but we estimate it to be £195.
Think carefully before securing other debts against your home.
Your home may be repossessed if you do not keep up repayments on your mortgage.
circumstances but we estimate it to be £195.
Think carefully before securing other debts against your home.
Your home may be repossessed if you do not keep up repayments on your mortgage.