This
is an insurance policy that will pay you a percentage of your
income, often until retirement, should you become
unable to work due to ill health - usually regardless of the causes.
If
this happens to you it will threaten your home unless you are fully
covered. Forget state benefits. At the time of writing they're £50
a week (for the first 28 weeks, rising to £67 after a year).
Your
employer may offer some type of insurance but you would need to
check what it is carefully. No matter how much they may love you
it's very unusual to carry on being paid more than 6 months after
someone's stopped working because of ill health.
You
normally get 50% to 60% of your income from a Permanent Health Insurance
pay out and it's inflation proof.
Watch
out for...
The
exact definition of disability used by the insurer
i.e. exactly what your being unable to work means. Look for
the magic words "own occupation". This
means the insurer can't claim that you may have been a PE teacher
but, now that you're paralysed, you could work from home sewing
mailbags and so they won't pay up...
If you see "own OR ANY occupation" watch
out. Any occupation means if the ex gym teacher can sew
mailbags then hey there are plenty of mailbag sewing jobs about...
A
policy that can increase its premiums
in the future. You need to know what you will be due to
pay out in the future and not have premiums increased
e.g. when you're getting older and the insurer starts thinking
you may be more likely to make a claim...
