Permanent Health Insurance

What it covers

This type of insurance gives you a monthly income if you are ill and unable to work, right up to retirement age if necessary. Most policies won't pay out if you're off work because of self-inflicted injuries, alcohol, non-prescribed drugs, pregnancy (unless you're incapacitated owing to complications after three months), or war. Most policies also exclude claims due to AIDS.

Types of policy

Level (flat rate) Cover And income With these the amount of cover you have does not change. And, if you're ill and receiving an income from the policy, the amount of income doesn't change either.

Increasing cover and income With these policies, both the amount of cover you take out before you are ill and the amount of income paid out while you are ill increase either by a fixed amount or in line with inflation.

Increasing cover or income Some policies increase only the amount of cover you have before you are ill. Others increase only the income you get while you are ill.

What influences cost?

PHI is fairly expensive. Premiums will increase with your age and with poor health. Women usually have to pay higher premiums than men. You may pay less if you're in a 'low-risk' job such as teaching, more if you're in a 'high-risk' job such as building work.

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Life Insurance Continued

What influences cost?

You'll pay more the older you are and the poorer your health. Women usually pay less than men of the same age because they have a greater life expectancy.

Points to note

- If what you need is just protection for your dependants, take out term insurance - for example, an increasing family income benefit policy. Don't take out investment-type insurance - it's expensive.

- If you've suffered from some serious illness - had a heart by-pass operation, for example - finding life insurance may be difficult. Try going to a broker.

-... see: Life Insurance Continued

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