Income Protection
Income Protection (Permanent Health Insurance) is a very important consideration for families and business owners. The reason is quite simply that your income is your biggest asset. If you are reliant on your own ability to earn money then a long term illness or disability could be devastating to you and your family. If you are one of the fortunate few who are financially independent then the ability to maintain your income from investments is equally important.
Income protection or permanent health insurance (PHI) is the only plan that can provide true protection right up to your retirement date.
There is widespread confusion amongst clients as to what PHI actually is, as well as what it delivers. It can be difficult to get the balance right between choice and complexity and certain providers within the market offer inferior products and cover bases.
A further issue to consider is who should propose and own the cover. Should it be paid personally out of post taxed income with benefits tax free or should it be sponsored by your company where corporation tax relief is possible but benefits can be taxed.
As with all plans income protection should not be bought in isolation and should be considered as part of a protection package alongside existing plans and any employment benefits.
There are many other types of insurance which claim to protect income. Payment protection insurance (PPI) should protect a loan or higher purchase agreement. PPI has been miss-sold by banks and building societies and is seen by some as having poor value.
Accident Sickness and Unemployment cover (ASU) provides you with an income to meet your outgoings if you were off sick or made redundant. Typically ASU would only cover your mortgage and associated expenditure for up to two years and you would need to wait for a period of 30-90 days in order to make your first claim.