PHI Insurance Income Protection. Broker Deals & Help.
PHI INSURANCE = TAX FREE MONTHLY PAYMENT
‘PROTECTION INCOME INSURANCE’
If unable to work 😓due to Accident, Sickness or Hospitalisation
What’s ‘PHI Insurance‘ Income Protection?
PHI Insurance = ‘Insurance Income Protection’ or also known as Permanent Health Insurance UK cover. A ‘PHI Scheme’ is an income insurance policy that provides a Tax Free Income to help protect your salary if you are unable to work through accident, illness or injury to help cover your regular bills & outgoings.
So an ‘income protection insurance uk’ plan is a permanent health insurance meaning it could be your ideal your Bill Insurance or Wages Insurance back up ‘Protect Income Insurance’ policy.
Whoever relies on your income if you are unable to – don’t let it be threatened ie; Your Loved Ones, Your Partner, Your Children, Your Family….Even Your Family Pets🐕🦺🐈🐴🐹
Indirectly therefore it also helps insure you don’t default on your regular bills and payments & so helps protects your UK credit profile ie; credit protection insurance if off work due to sickness.
5 Reasons – Why you may need PHI ‘Insurance Income Protection’
The ‘benefits of income protection’ are against the background of these 5 reasons;
- Government Sickpay – is less than £100 per week
- Work Sickpay – often paid for less time than you think
- Your Savings – may last a few months & helps protect credit history
- Your Outgoings – Bills & Expenses do not suddenly stop, if you stop
- We are Human – so the ‘Money Making Machine’ can break down
‘Nobody thinks they are a Money Making Machine‘
‘Could you rely solely on Savings if no Income’
‘We all have a Lifestyle to protect’
How does (PHI Cover) Permanent Health Insurance work?
- UK Insurers may usually offer their ‘maximum income protection benefit’ PHI up to 65/75% of gross annual income
- This maximum amount for an income protector policy may vary between Insurers schemes
- You can decide to fully insure your annual salary or just your main monthly outgoings
- Initial deferral or waiting period is applied. This can be 1/2/4/8/13/26 or 52 weeks or split to dovetail with your work or personal situation
- Note: Covid 19 may well have affected some ‘income protection insurance uk’ shorter deferral period availability
- You can choose wether your in claim period is for a shorter limited term ie; 1/2/5 years per claim | or full term claim upto policy ends
- It can run for any length of time eg; your mortgage term or upto your retirement
- PHI is underwritten insurance so Insurers ask medical & lifestyle questions before offering terms. It may also involve GP reports & tests
- Your gender whether male or female no longer affects insurance rates for PHI since 2012
- Waiver of Premium so you do not have to pay the premiums in claim ie; help cover bills insurance costs
Note: Insurers will also need you to either proove your monthly income (as you cannot be better off sick than well) or request that you were working more than a set numbers of hours to qualify for cover.
However, providers do differ here so check with us when you are doing an ‘income protection insurance comparison’ or using an ‘Income Protection Calculator’.
CONCLUSION: The earlier you want your benefits or longer the in claim period the higher the costs
*Does Martin Lewis recommend Income Protection Insurance PHI?
He points out that it pays you an income if you’re unable to work due to illness or disability for a set period (generally a year or two).
Unsure if MSE meant here, if you could be off sick for a year or two…because as brokers we find many Insurers also offer full term income protection (not just for 1 or 2 years in claim).
Income protection he comments will usually pay a proportion of your salary, for example two-thirds, so that essential spending is covered.
He say income protection generally includes a greater range of illnesses in comparison to critical illness cover, but it can also be more expensive.
MSE generally says insurance is a cheap financial lifeline but the ultimate choice is always yours.
The MoneySavingExpert also says when it comes to deciding between the two types of insurance, it could be worth speaking to a financial adviser.
In general, Martin Lewis says you will often find the “Cheapest Quotes by going to a Broker” & NOT via Comparison Sites.
Martin Lewis suggests being the Money Expert “NEVER BLINDLY BUY DIRECT” expensive policy offers either via a Bank or One Insurer ie; Shop around or use a Broker.
Lastly, the MoneySavingExpert also said generally remember, not all insurers plans are featured on insurance comparison sites. We would agree here – so let’s help you shop around for your best broker deals.
In terms of the large range of income protection insurance products available, Money Saving Expert are fully impartial with all their best buy reviews. As you maybe aware, neither Martin nor MSE never endorse products.
Note: Yes, they mention individual products & services on MSE site, but they make it very clear don’t ‘support’ them.
What does ‘PHI in Insurance’ Cover?
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- ‘PHI Benefit’ covers most physical, accidental or mental health illness that mean you cannot work
- It pays out also if you had an accident, injury or hospitalised – your bills insurance back up
- If hospitalised, some insurers may also pay you £100 per night upto 3 months & after 6 nights
- ‘Income Protection Insurance UK’ plans may also include Fracture or Trauma benefit that pays various lump sum amounts
- Death benefits (if included) may just mean a lump sum sufficient for funeral costs or return of some premiums
- It does not usually cover unemployment or redundancy, unless this is due to incapacity
- Some Insurers may reduce uk income protection insurance cost benefits if you get any means tested State benefits
CONCLUSION: PHI Insurance for Income protection offers comprehensive sickpay benefits
‘Is Income Protection Taxable’?
- Is Income Protection taxable? NO, if its personal cover
- Personal PHI income protection monthly payments are currently free from UK taxation (Tax rules may change)
- As you have paid from your net income after tax (not gross), so the tax rules could deem it unfair as effectively already been taxed
- PHI insurance premiums must be paid from your own personal account (not paid by a business)
- Some personal PHI plans may include a death lump sum. If paid this may be subject to UK inheritance tax, dependant on personal circumstances
‘Is Income Protection Insurance Tax Deductible’?
- Is Income Protection tax deductible UK? YES, usually if it’s only business based cover
- HMRC may only grant business owners or company corporation tax relief on these business income protection premiums ie; benefits are paid PAYE
- Premiums are then treated as a tax-deductible business expense to the employer. This cost is deducted from profits of their business
- Income protection payments paid on claim to a contractor will then be treated as income
- If your protection income insurance plan is part of a group PHI scheme, the employer gets benefits tax free but then PAYE tax is on your claims paid
- Business Executive Income Protection is similar with PAYE tax paid on your claim payments
- ‘Are income protection premiums tax deductible? YES, often if it’s business related coverage
CONCLUSION: Is Income Protection Tax Deductible UK? No, Personal. Yes, Business.
Own|Suited|Any Occupation|Work Tasks re Protected Income Insurance?
- These distinctions are critical to understanding your ideal ‘PHI Benefit’ protection income insurance policy
- Below are how the 4 main terms are used for uk income protection insurance cost
- Own Occupation: you are unable to do the tasks relating to your own job or occupation whether employed or self employed
- Suited Occupation: you can’t do your own job or a similar occupation that suits your qualifications & experience.
- Any Occupation: you are too ill or sick to do any work eg; agency worker or hgv driver
- Working tasks: You cannot do say 3 of various activities of Daily Living eg; cannot walk, bend, lift, climb, write, seeing, communicate, mental failure.
CONCLUSION: ‘Insurance Income Protection’ ideally should be Own Occupation
4 Risk Categories for PHI ‘Protect Income Insurance’
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- Different Occupations or pastimes also mean a higher ‘risk class’ ie; the more likely that you may need to make a claim
- Class 1: Professional workers eg; managers, admin clerks / staff, secretarial, staff with low business miles
- Class 2: Some lighter skilled manual work workers eg; florist, shop staff, sales people doing higher miles
- Class 3: Skilled & semi skilled manual workers eg; electrician, care staff, plumbers, teachers, taxi drivers
- Class 4: Heavy manual workers & unskilled workers eg; construction workers, bar staff, car mechanics
CONCLUSION: Low risk jobs are cheaper & higher risk jobs are more expensive cost
“PHI Insurance” Income Protector Policy = Tax Free Monthly Income benefits
- Insurers PHI payments are paid free from UK personal tax liability to either income or capital gains tax.
- PHI on insurance benefits based on average 65/75 % of gross annual income or net profits if self employed
- Insurers often stagger their benefits amounts available, reducing cover based on a rising salary scale
- ‘Income Protection Insurance UK’ plans vary as to how Government state benefits are worked into their calculations
- The UK income protection insurance PHI plan should be paid via your personal bank account
- For business or executive PHI Insurance UK – please refer to that section.
CONCLUSION: Check Insurers ‘protection income insurance’ view re State benefits also
Life Insurance vs Income Protection work sickpay?
- Life Insurance pays out if you die & income protection pays out if you are sick
- Some employers may offer life insurance with income protection employee benefits
- Sometimes sick pay benefits are discretionary & so viewed on a ‘case by case’ basis
- For other employers they may ask you pay for any extra employee sickpay cover
- This could be a form of company sponsored PHI income protection (usually good value vs personal PHI)
- If not, most work sickpay schemes often runs for a limited time period ie; just upto 3 or 6 months
- After that you maybe reliant on just State benefits ie; you need a longer term wages insurance
CONCLUSION: Check T&C’s at work. Life Insurance vs Income Protection. Don’t assume you are covered
Do I need “PHI Insurance” or Critical Illness or Both?
- PHI Insurance pays out a tax free income benefit calculated on your gross annual income ie; wages insurance
- Research* shows 40% of average workers has less than £1,000 in their savings back up
- Critical Illness is not calculated on your gross income earnings, so avoids double insured issues
- So Critical Illness Cover may still pay out tax free benefits alongside PHI Insurance UK
- Lifecover and critical illness can provide you additional back up protection cover
- This payment could now help repay a mortgage, loan, debts or adjust your lifestyle
- Critical Illness gives Lump Sums or Family Income Benefits options
CONCLUSION: Ideally you may want both forms of protection to help cover potential shortfalls.
Life Insurance and Income Protection, PHI is more expensive. Why?
- Life Insurance with Income Protection PHI claim payouts are higher as large number of risk conditions
- Life Assurance cover however pays out if you just die or terminally ill
- In the UK for example 50% or 1 in 2 of people will be diagnosed with a cancer in their lifetime [ Over 200 cancer types according to Macmillan ]
- However, medical advances means luckily survival rates are now far higher than years ago.
- Either way, one would still need time off work to fully recover if job is very focused eg; Airline Pilots.
- Life insurance and ‘protect income insurance’ PHI are both wages insurance back up cover
CONCLUSION: Statistically you are far more likely to claim on a PHI policy, so higher risk costs
What’s PHI ‘Income Protection Insurance UK’ Claims Record?
- Many Insurers ‘Income Protection Insurance UK’ now do follow ABI standards to assist claims.
- Here are some statistics below from Association of British Insurers ABI …for year 2021*
- The average PHI Insurance payout was around £23k pa.
- Over £700million was paid in Insurance PHI claim payments. * UK Life Insurers Claim Reports: Aviva | Zurich | Legal & General | LV= | Royal London | Scottish Widows | Vitality Life |
CONCLUSION: 86% of PHI Insurance for Income Protection claims were paid out (*ABI 2021 )
Why PHI ‘Insurance for Income Protection’ may not always pay out
- So we can see that in 2018 according to the ABI – If 88% paid out, then 12% of PHI Insurance claims didn’t.
- Note: under Insurance rules – you cannot be better off financially with Insurance plans when sick than when healthy
- Possible reasons that UK Insurers do not consider a ‘Income Protection Insurance UK’ PHI claim ?
- 1 ] Policy definition: It doesn’t cover the benefit you claim for eg; may cover ‘Any Occupation Basis’ but you can no longer do your ‘existing occupation’ only
- 2 ] Non disclosure: You didn’t advise a familial history of raised blood pressure or cholesterol eg; Insurers find this out upon claim & so refuse payout
- 3 ] Exclusions: Insurers apply this due to some pre-existing health issues from outset eg; you make a claim hoping Insurers may still pay out
- 4 ] Occupation Change: Some Insurers do require you to notify them of a job switch eg; You take the plan out as a Clerical Worker, then become a Racing Driver
- 5 ] Ongoing Income: You are still getting paid via self employed jobs, whilst off ill from employed work, have other similar sickpay insurances or get an earlier pension
- 6 ] Redundancy: You cannot make an ‘income protection insurance redundancy’ claim. However, insurers are flexible to allow some cover levels whilst job searching
CONCLUSION: Check your small print T&C’s. Keep Insurers informed. Tell the truth
What’s Accident Only Income Protection?
- Income Protection policy offering cover just for accidents
- Policies may offer cover for either 1 or 2 years per each claim
- If you can’t work because of an accident & have lost earnings as a result
- Accident Only Income Protection is designed to pay a benefit whilst you recover
- Usually this type of policy has No medical underwriting
- Cover PHI typically up to 70% of earnings and are age cost based
- Options to cover accidental death if death occurs within 30 days of that accident
- Extend cover for a range of higher risk hazardous pursuits
CONCLUSION: Cost effective Income Protection for those who can’t afford full PHI cover
Is PHI Insurance (Wages Insurance) the same as PPI Insurance?
- PPI [Payment protection Insurance ] is designed to help cover payments for some form of loan, credit or store card, mortgage payment [ MPPI ]
- It is a short term cover plan & usually paid for upto 12/24 months.
- Insurance PHI is a bills insurance, a longer term income protector policy which may cover upto retirement.
- May also cover unemployment as well as accident & sickness. PHI cover does not cover unemployment only.
- PPI is not medically underwritten in the same way [ like PHI ] meaning cover is offered with no upfront GP reports, personal health or medical tests
- However, there are conditions to apply. PPI may well exclude various risks, pre-existing issues or employment problems for a period of time after policy starts.
CONCLUSION: The 2 products PHI + PPI are actually quite different.
How do I make a ‘PHI in Insurance’ claim?
- If you can’t work due to an illness or injury, you should tell Insurers as soon as possible to start off the PHI claims process
- Naturally however you need medical advice if this is going to be short or long term health issue. ie; Will you be off work for 12 weeks or say 12 months
- The claim should ideally be before your chosen deferred period ie; If deferred period is say 8 weeks, then let Insurers know before this
- If you are too seriously ill to enable you to make a claim, a family member can usually assist a claims process (subject to GDPR rules)
CONCLUSION: Insurers will assess your claim after information via your GP or Hospital Consultant
Income Protect Insurers additional PHI Benefits?
- Premium waiver means the protected income insurance policy pays your premiums whilst in claim. Ideally ‘inclusive’ so not paid for
- Many Insurers now offer Best Doctors Service giving access to top medical specialists.
- Some also offer GP 24/7 services if NHS Doctor is too busy or giving that valuable 2’nd opinion to give peace of mind
- Red ARC nurses offer rehabilitation services such as Mental health specialists. These can assist family members also
- Factors in these rider benefits in rather than just asking ‘how much for income protection insurance’
CONCLUSION: These additional services show it is not all about policy payments on claim
‘Income Protection Insurance Comparison’ & back to work after a claim?
- The policy monthly benefits stop after you go back to work, as will any premium waiver
- The plan is still active & you will then continue to pay your premiums
- However, if you cannot do exactly what job you were doing before – Some Insurers may then pay a reduced or proportional benefit.
- This takes account of any earnings loss or reduction due to your illness or injury affecting family life
Redundancy Income Protection Insurance?
- ‘Does Income Protection Cover Redundancy’? NO: Income Protection is NOT Unemployment Insurance
- This applies also if your employer has then decided to make your current job role redundant due to your long term illness
- You therefore need to understand how job redundancy income protection insurance is affected after you recover
- Insurers will not carry on paying out any income protection insurance with redundancy cover back up
- It could be you have to switch to a different occupation also because of your incapacity
- Or you now have to do reduced work hours or restricted your duties
- In this instance you may need to advise & liase with PHI Insurance Income Protector Policy providers
CONCLUSION: ‘Income Protection Insurance Redundancy UK’ is not covered re unemployment
Can I make Multiple Claims on PHI Benefits Insurance Policy?
- Yes, there is usually no limit to the number of claims you can make during your working life on a protected income insurance
- For example, if you go back to work but then have a similar linked illness within 12 months
- In this instance then some Insurers may also waive your deferred waiting claims period on a uk income protection insurance
- ‘Compare income protection insurance’ as some Insurers may impose a back to work time period before allowing a 2nd or similar claim
- Again you cannot make a multiple PHI claim for ‘income protection insurance for redundancy’
CONCLUSION: We can help arrange your ideal PHI Benefits Insurance from leading UK Insurers
Income Protection Insurance Quotes Online
Covid 19 & Insurance for Income Protection claims?
- Insurers may now ask in the last 3 months have tested positive or had recent contact with anyone with symptoms
- If so you may have to await your full recovery and be fully OK before you can re-apply for uk income protection insurance
- Standard rates will apply after any self-isolation period & assuming no other health issues
- Any refusal to be vaccinated, will not affect consideration payment of a claim re ‘Protect Income Insurance’
- Receiving a COVID-19 vaccination & getting side effects Insurers say will be treated as any other claim
CONCLUSION: Business claims as usual appears to be the answer from most Insurers
What is the ‘Best Income Protection Insurance’ UK?
- There is no set answer to this question, as given this type of insurance for salary, the devil is really in the policy detail
- Ideally ‘Income Protection Insurance UK’ plans should be paid for on ‘own occupation’ basis & full term per claim
- Different Insurers plans may limit ‘income protection insurance how much’ you can cover yourself for
- Fixed guaranteed premiums are great to have but maybe too expensive if your job or pastimes are considered high risk
- Likewise the cheapest income protection policy isn’t necessarily the best, as it may have reviewable premiums or payout for a short period on claim
- So the most comprehensive protection income insurance policy isn’t always the best, it could be unsuitable to your individual case circumstances or budget
CONCLUSION: Speak to our Protection Broker about Best Income Protection Policy
What does ‘Insurance for Income Protection’ Cost?
Well, that’s the million pound question! If you earned £30,000pa then worked for the next 35 years until retirement, you could potentially earn over £1 million gross ie; £30,000pa x 35 years [or more with any future inflation wage rises].
Consider this simple calculation when working out ‘how much income protection insurance’ you may need. Then work out your regular outgoings against this & any savings or investments you may have, to find your own answer ‘is income protection insurance worth it’?
As such, feel free to do you own self employed income protection quote – to then value what your income is worth to your family lifestyle and bills if off sick ?
- The cost of average Car Insurance bill is @ £40pm
- The cost of average Mobile Phone bill is @ £45pm
- The cost of average Broadband Package bill is @ £44pm
- The cost of average Fuel and Gas Electric bill is @ £100+pm
Conclusion: ‘Benefits of Income Protection’ PHI
Consider ‘how much is income protection insurance’ PHI worth to you, if you could not provide for yourself & family. The bills won’t stop coming in sadly…just because you are off work sick.
But the benefit period income protection can provide may also allow you to not drown financially ie; the benefits of income protection insurance may help allow you recover during this off work period.
If you sadly also lose your job through a long term illness, then note PHI cover is not also a long term ‘income protection redundancy insurance’. Factor this into any ‘Income Protection Calculator’.
Hopefully by now you will have answered the question ‘is income protection worth it’? Get our professional broker advice on getting a UK PHI protection income insurance plan.
Article on UK Income Protection Insurance PHI by Martyn Spencer Financial Adviser 2024
Unsure ? Get online no obligation Quotes for Income Protection OR to speak with a Professional Financial Adviser – about your ideal PHI in Insurance Policy.
Our 5 Point Plan – To help you
- Confidentially discuss your own personal situation & any concerns you may have re ‘Protect Income Insurance’
- Assess your position given factors such as – health, age, personal & family history
- Compare your various protected income insurance quotes online – from a fair & personal analysis
- Get a Competitive Income Protection Quotes Online from one of the UK’s leading Life Insurers
- Then if you are happy to proceed, given an affordable budget discuss an insurance for salary or bills insurance
- Help arrange your ideal PHI cover Insurance for Income Protection plan
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