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This is also called Income Protection and
will cover your income in case of you being
unable to work through sickness or injury.
PHI can start after 4, 13, 26, 52 or 104
weeks and will continue until you are between
50 and 65. It is important to ensure that
it does not start while your employer will
still pay you. It is very sensible to get
out your employment contract to see how
long you will be paid for. I have acted
upon instructions from Jonathan White with
regard to the correct deferred period. Please
ensure that this is in keeping with what
your employer offers because if you insure
yourself for something that your employer
already offers then you will be paying for
something that you will never receive.
PHI should always be written on an escalating
basis. This means that your protection will
increase along with your income and inflation.
There are three types of contract.
1. Guaranteed.
2. Reviewable.
3. Reviewable with the premium increasing
faster than inflation.
Guaranteed - The premiums are guaranteed
to remain the same throughout the course
of the plan.
Reviewable - At each review, a check is
made that contributions are sufficient to
maintain the benefits until the end of the
selected term of the plan in the light of
the investment and claims experience of
the company at that time.
Reviewable with the premium increasing
faster than inflation - in this plan the
cover is inflation proofed while the premium
increases each year in line with your increased
age.
There are four different definitions for
which cover can be claimed.
1. The own occupation definition of disability
means the life assured must be unable to
perform the material and substantial duties
of the occupation in which the life assured
was engaged immediately prior to the onset
of the sickness or accident and is not following
any other gainful occupation. This is the
most generous definition.
2. During the first year of sickness or
injury, 'unable to work' is interpreted
as being unable to carry out the occupation,
which was being undertaken at the time the
incapacity commenced. After 12 months, this
changes to being unable to carry out any
occupation.
3. You will receive the full benefits if
you are totally unable to follow your normal
or any other reasonably suitable occupation
and are not following any other occupation.
4. Afflicted with illness and totally unable
to follow any occupation.
As I am sure you are aware if you stop
paying the premiums your cover will cease.
You should also be aware if you change jobs
the premium may have to be increased to
reflect any increased risk associated with
any new job you may have.
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