Permanent Health Insurance
Definition
In return for regular premiums, PHI provides an income in the event of the policy holder contracting a long term illness or injury. There is no payment on death.
- Benefits are paid usually after a waiting period of several months or even a year known as the deferment period. During the deferment period the employer will often pay the employee's salary.
- The benefit payable will normally be no greater than 75% of earnings in the year preceding the disability and usually continue to retirement age. This is to encourage people to return to work in the event of partial or full recovery.
- If a claim becomes payable, the policy holder will receive payment free of tax during the year the disability occurs. This also applies for the subsequent tax year (6th April to 5th April).