Permanent Health Insurance or Income Protection Plans

These plans are designed to pay a monthly income should the insured be unable to work due to accident or illness. Typically they are written to an individual’s normal retirement age and benefits are payable gross, with no liability to income tax.

Plans are set up to complement an existing employer’s sick pay arrangements, hence may have a deferred period, i.e. the benefit would become payable once the employer’s arrangements ceased.

In order to ensure that a policyholder is not financially better off by claiming, there is a limit on the benefit payable. This currently stands at 60% of monthly salary and includes benefits derived from all income protection plans. For this reason it is important to keep providers informed of your personal circumstances to ensure that you are not paying for so called non existent cover.

Insurance companies classify disability into five main categories:

• Own Occupation - The insured will be classified as disabled if in the opinion of the provider is, by reason of accident or illness, totally unable to perform their occupation and is not following any other employment.


• Suited Occupation - The insured will be classified as disabled if in the opinion of the provider is, by reason of accident or illness, totally unable to perform any occupation to which they are suited by education, training or experience.


• Any Occupation - The insured will be classified as disabled if in the opinion of the provider is, by reason of accident or illness, totally unable to perform any occupation whatsoever.


• Activities of Daily Living - The insured will be classified as disabled if in the opinion of the provider is, by reason of accident or illness, totally unable to perform, without direct assistance from a third party, four or more of the following activities: dressing or undressing, washing and bathing, eating, climbing stairs, shopping, preparing food.


• Key Person - The insured will be classified as disabled if in the opinion of the provider is, by reason of accident or illness, totally unable to perform their own occupation within a company.