Permanent Health Insurance Continued

Points to note

- If you are self-employed this type of insurance could be essential. It could be your major source of income since state sickness benefits provide only a very low income.

- The index-linked or increasing type of policy is more expensive, but if you take out only a level policy it would be worth just over half as much in ten years' time, assuming an inflation rate of five per cent a year over the period.

- There's a time-lag between the start of your illness and time the policy starts to pay out - the 'deferment' period. You can choose anything from a month to two years' deferment. The longer the deferment period the less you pay in premiums. Consider whe>- Check the policy carefully for any restrictions on risky hobbies and establish what the insurer considers these to be. Also look out for restrictions related to your living abroad for any length of time.

- If you're a non-smoker you can get a lower premium from some insurers. But check that you can't get an even cheaper premium with another company that doesn't make this distinction.

How much to insure for

This depends very much on your personal circumstances. Most policies put certain limits on the amount you can get. For example, you can't usually take out cover for more than three-quarters of your earnings, and with some companies the limit is just a half of earnings. There will probably be a deduction too to take account of any state benefits that you qualify for. Some companies reduce the amount of cover on earnings above a particular level.

Read more about The Annual Percentage Rate (apr)

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... see: Permanent Health Insurance

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