Often seen as the cornerstone of most practitioners’ financial planning, permanent health insurance replaces lost earnings as a result of illness or accident. It pays a percentage of provable income for as long as you are off sick but the terms and conditions vary between insurers so specialist advice is crucial.
Depending on your status and circumstances, benefit can be payable either immediately (day one) or after a deferred period of, for example, one, three or six months.
Key factors are the definition of disability and whether the premiums are guaranteed or reviewable. Opting for too early a retirement age , whilst keeping premiums lower, may be a false economy and over optimistic. This is because, if you are unfortunate enough to be permanently incapacitated, when you originally wanted to retire is academic as you would then want the benefit to be payable for the longest possible period; 60 if not 65.