Guide to Protection Insurance in the UK

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What is Income Protection Insurance or Permanent Health Insurance - PHI

Both income protection insurance and permanent health insurance plans provides you with a monthly benefit which replaces your regular income should you not be able to go to work because of a form of illness, or if you suffer an injury. You pay premiums, which are affected by certain criteria, and then you receive cover for the period which you are unable to work, this may take you up to retirement age, when you would normally have ceased employment and be receiving pension payments.

The maximum benefit is usually between 50% - 80% of your income, you may also be entitled to receive incapacity benefit and statutory sick pay from your employer. It is in the insurers best interest that you are enticed to go back to paid employment as soon as possible, and for this reason they do not pay 100% of your earnings. However, whilst you are still paying your premiums you can make as many claims as you need to, so if you suffer from many separate illnesses you are still covered.

There are different levels of cover which offer different levels of benefits and the premium are obviously affected by this.

Different Cover Types	Benefits
Level Benefit	Cover stays the same throughout the claim period, meaning your cover decreases in real terms.
Growth Benefit	Cover increases by an agreed amount per annum.
Optional Increasing Benefit	Allows the policy holder increase benefit by a certain percentage after each regular period.
Index Linked Benefit	The benefits increase alongside inflation.

Before taking out any insurance policies, check what cover you already have. It is also worth speaking to your employer as some companies have an insurance known as Group Income Protection Policy. This insurance covers the companies employees against loss of earnings due to accident and illness but it doesn’t cover you for redundancy.

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Guide Contents

Mortgage & Income Protection Insurance Plans
What is a mortgage payment protection insurance (MPPI)?
What is income protection insurance or permanent health insurance - PHI?
Different types of income protection cover
Where to get your insurance cover
Applying for your Mortgage Protection Plan or your Income Protection Plan
Income Protection Plan - Mortgage Protection Plan FAQ
Where to get further help on mortgage protection advice

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