With permanent health insurance (also known as Income Protection) the policy will pay you a replacement income if you cannot work through illness or accident and you do have a loss of earnings.
Statutory Sick Pay (SSP) is paid by your employer for up to 26 weeks but is unlikely to provide adequate income protection in the event of serious illness. In fact the state offers only minimal help with strict eligibility rules for incapacity benefits. After 28 weeks of illness claimants must undergo a test checking their ability to carry out a range of work related activities such as walking, sitting and using stairs. Even if they do qualify benefits are not generous and they are taxable.
Long term illness is something most of us prefer not to think about but official figures show that every year more than 670,000 men aged between 40 and 64 are absent from work for more than 6 months because of it.
The contract pays a regular income designed to protect your standard of living if you suffer long-term sickness or injury. Benefits usually start after an initial waiting period of 4, 13, 26 or 52 weeks and are payable until you return to work, die or until the policy expires (whichever happens first).
The policy is called "permanent" because the insurer cannot cancel the policy no matter how often you claim the benefit (although it is normal practice to write a permanent health insurance policy to finish and coincide with pension benefits commencing).
No two policies are the same and companies have different attitudes towards various occupations and the cost depends on occupation, the waiting period before the benefits start, the term of the plan, gender, whether you are a smoker or non-smoker and of course your occupation and health.
