income protection insurance policy (IPI), (previously known as permanent health insurance, PHI), is an income replacement policy, and is paid when income is lost as a result of long term illness or disability. If you want to find out how much family life insurance you may need give us a call for a chat.
Under an IPI policy, an income is paid to the policyholder at the end of an initial waiting period, which would normally correspond to the period salary payments continue from employer, or use of savings for the self-employed sometimes called a deferred period or an elimination period (usually 4, 13, 26 or 52 weeks). The benefit is payable until the earlier of expiry of the policy term (usually age 60 or 65 to coincide with retirement age), the policyholder’s return to work, or death.
The tax treatment and recent pension legislation can affect the planning requirements of individuals. Claim benefits from employer sponsored group schemes are paid to the individual via the PAYE system and are classed as earnings and therefore are pensionable. Individual policies claim benefits are paid tax free and are not classed as earnings, which means in a claim situation an individual can only receive tax relief on contributions. The same scenario applies to premium/contribution waiver insurance.
Other types of protection you many need to consider MPPI protection, critical illness and private medical insurance provides important protection to people, to protect their income and finances during long term or serious illness.
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