Income/sickness Insurance

Mogs_2

Hi
First post so be gentle
I am considering taking out insurance to cover my income in the case of long term sickness. On the face of it it looks like a good idea. £25 a month will give me £660 per month income from now up to age 65 if I remain sick. It doesn't cover my income but will help. However the criteria laid out by the policy to qualify looks like a way of not paying out to me. Criteria such as 'unable to stand using one arm as support for 10 mins' and 'unable to get up off a chair without assistance'. There are nine criteria and you have to fail on at least three to qualify. Basically I was wondering if anyone has any experience, opinions or advice on these sort of policies

Thanks

dunstonh

Income protection comes in budget, standard and comprehensive form. There are also payment protection plans called income protection but they fall under the really budget category.

The way they judge you ability to work will vary on the quality of the policy. The cheaper the policy, the worse you have to be ill to claim. Ok, thats very simplistic but its a rough guide. Some will have an abilities check (like you mention) whilst others will go by a doctors report on your ability to do you own occupation, a suited occupation or any occupation.

Permanent Health Insurance (PHI) is actually quite a hard product to choose which is best as you cannot go by premiums. You need to look at how claims are handled and what restrictions are in place. You also need to know if you are looking at Payment Protection and not PHI or budget, standard and comprehensive plans.

Mogs_2

Thanks for the reply. Are the words budget, standard and comprehensive official terms for this type of policy? ie could I ask the provider which sort this policy is. Also, which would be the best policy to go for, Payment Protection or PHI?

Thanks

dunstonh

Are the words budget, standard and comprehensive official terms for this type of policy?

At IFA level yes but the providers dont retail their options calling them that.

Some providers may only offer one type of PHI whilst others offer versions with addons and some offer 3 different versions.

Also, which would be the best policy to go for, Payment Protection or PHI?

PHI is far superior.

Mogs_2

The documentation is quite ambiguous so I cannot tell whether it is a PHI or Payment Protection type. It is just called 'Income Protection Plan. Also the cost rises and falls in line with the amount of income I want to protect so cost is no indication of how good the policy is or how ill you have to be before you can claim.

There is nothing in the documentaion regarding long term incapacity from sports injuries either (I ski) but I can ask that in my next consultation meeting

dunstonh

The documentation is quite ambiguous so I cannot tell whether it is a PHI or Payment Protection type. It is just called 'Income Protection Plan.

That is quite normal nowadays. Marketing men have decided that income protection is a better name than PHI or PPI. It does make it confusing for those that dont know how to tell the difference. We often see it on here where people have said they have bought PHI but have bought PPI instead.

There is nothing in the documentaion regarding long term incapacity from sports injuries either (I ski) but I can ask that in my next consultation meeting

As you ski, that will probably be classed as a high risk activity and you will be asked to give a bit more detail. That may increase the premiums if the insurance company feels it is a higher risk to them. PPI's on the other hand are unlikely to ask you that question but would automatically refuse a claim in that area as the underwrite at point of claim. Unlike PHIs which underwrite at point of sale.

Mogs_2

Thanks very much for this information. It's really helpful. Before I go any further I need to identify the type of policy. The fact that PPIs would possibly refuse to pay out in the event of a claim is scandalous