Permanent Health Cover

Permanent health cover insurance is also referred to as permanent health insurance (PHI), Long term income protection or permanent disability cover. It is an insurance contract that is primarily designed to replace an individual's income in the event of either accident or illness.

The pricing and terms for permanent health cover are based on many factors, the most influential of which is the job or occupation you perform. Prices tend to be far cheaper for the young professional whereas for older people, who perform more manual roles the prices tend to be higher. The policy is usually set up with a deferred or waiting period. This is the amount of time a policy holder would have to wait from the time of the accident or illness until a regular monthly payment would commence. Permanent health cover like most private health insurance requires medical underwriting prior to acceptance and offer of terms. When an application is made for permanent health cover, the insurer will consider the case and its merits based on the application form and the individual's personal medical records, which will be obtained from the applicant's general practitioner. If the applicant is considered a good risk then terms will be offered. If the individual has a history of ill health, i.e. a persistent bad back or depression, it is most likely that this pre-existing condition will be excluded from any future claim on the permanent health cover insurance. In some cases the insurer will not offer cover if the applicant is deemed too much of a risk to the insurance provider, this is referred to as a 'decline'.

Permanent health cover is paid free of all tax, with maximum benefit available ranging from 50 to 65% of gross earned income dependent on the insurer's own limits. Permanent health cover is available to both employed and self employed individuals, it is important to remember that at the point of claim, the insurer will require evidence of your earnings over the previous 12 months. If you have not received the full remuneration you stated on the application form, then you may not be able to claim the full benefit you applied for, this is probably more of a concern for the self employed as earnings can easily fluctuate from year to year.

When accepted for cover after the necessary underwriting checks, cover can now start. Permanent health cover, as its name suggests provides robust long term protection against accident and illness, as long as you pay your premiums, the insurer cannot cancel the policy regardless of the time or number of different claims made under the contract. Unlike short term accident and sickness plans, which can only pay out for a maximum of 12 months, permanent health cover can provide a continuous income until either you die, fully recover or the policy terminates at your chosen retirement age, generally age 65.

Permanent health cover plans can vary greatly dependent on your occupation and the terms offered by individual insurers. The most important feature to look for when choosing a suitable policy is the essential 'own occupation' definition of incapacity. This definition ensures that if an individual is unable to perform his or her own job, then a claim is payable. Beware of plans which offer 'any occupation' definitions, this type of contract is greatly inferior as the insurer can insist the claimant do any other job first before paying a claim, for example would a surgeon want to collect trolleys at the local supermarket?