What is Permanent Health Insurance (PHI)?
Permanent Health Insurance (PHI) is an insurance policy which will provide a regular monthly payment until your specified retirement age, or, until you get better, in the event that you are unable to work due to illness; the illnesses covered will be pretty broad. Generally speaking, most permanent health insurance policies will cover you for any illness that is sufficiently severe to stop you working.
What are the pros and cons of Permanent Health Insurance (PHI)?
The big pro with Permanent Health Insurance is that it offers wide ranging cover in the event that you are unable to work due to illness. The insurance company will make a regular monthly payment to you, which is tax free, until either you're able to go back to work or you reach a specified retirement age. In the event that perhaps you have a serious illness, and are able to go back to work initially on a part-time basis, some companies will work with you to actually help you go back to work. They do this by making part payments when you go back to work part time so that you actually don't lose out by going back to work. So, that's a really major benefit for something about which you just cannot tell whether or not it's going to happen to you. There are no real cons apart from the fact that you've got to pay out a regular monthly premium.
Where can I get Permanent Health Insurance (PHI) from?
The best place to buy permanent health insurance (PHI) would normally be either your mortgage broker, providing they offer you a choice of insurance from different companies or an independent financial advisor. It is possible to buy permanent health insurance (PHI) directly from the insurance company, but I would advise against that because that way you'll have no choice and they will clearly promote the benefits of that policy without telling you what the downsides are or what the benfits are of other companies' permanent health insurance (PHI) policies. So it's really a good idea to talk to somebody who can give you specialized independent advice.
What should I be aware of when getting Permanent Health Insurance (PHI)?
A key consideration which will influence the amount of monthly premium is the age to which you want the insurance to run. If, for example, you expect to retire at 65, you could still have insurance finishing at age 6 – and that will cost less, but you need to weigh up the benefit of paying lower premiums with it's advantage that you will not, then, have coverage between age 60 and 65. Equally, some companies will quote you a guaranteed premium for the whole term of the policy. Other companies will quote you what called a variable rate premium, which means that they have the right to change it. So, that, clearly, is more risky because the premium could go up. Another consideration is how much cover you want. As the probability is that you income will go up during your working life, it's often a good idea to take out a policy whereby the amount of cover steadily increases, perhaps in line with inflation or perhaps a certain amount each year. Generally speaking, if you do that the monthly costs will go up each year in line with the extra cover. But, if you don't have a policy that gives you regular increases, then should you want to increase the cover in the future, you may not be able to do so if your health has deteriorated.
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