Protection for your income or borrowing
There are a number of options when it comes to insuring your financial assets and commitments, whether providing an income if you're unable to work through long-term sickness or disability, or protecting and continuing to make payments on mortgages, loans and credit cards in the event of you losing your job. Find out about the main ones here.
Protection for your income
Permanent health insurance (PHI) is an income protection policy that replaces part of your income if you're unable to work for a long period of time, through illness or disability. Once started, it will continue to pay you an income until you're able to work again, or you reach retirement, whichever happens soonest.
There is a waiting period before payments start, which is agreed when you take out the policy. So when choosing, be sure you would be financially comfortable while you wait for the policy payments to kick in. But being able to wait longer may lower your premiums.
If you have existing health problems that could lead to your inability to work, or your job is considered dangerous, its unlikely you will be eligible for this cover.
At a glance:
- Provides an income if you're unable to work through long-term illness or disability
- May be offered through your employer
- Payments don't start immediately
- Does not provide cover if you lose your job
Protection for your borrowing
As the name implies, Payment Protection Insurance helps you maintain financial commitments if you're unable to work due to an accident, sickness or unemployment. In fact, it is sometimes sold as accident, sickness and unemployment insurance.
It could continue to cover loan and credit card repayments in the event of you being made redundant or suffering an accident or illness that means you can't go to work. It won't kick in immediately, usually it starts one month after your income stops and will continue to pay for up to 24 months depending on the level of cover.
This type of insurance is routinely offered when you take out a new card or loan, but its not compulsory and you don't have to take what's offered it pays to shop around.
At a glance:
- Protects credit card or loan repayments if you're unable to work through illness or accident, or you're made redundant
- Can cover you for up to 24 months
- Its not compulsory