Should I consider PHI to cover my mortgage?

Permanent Health Insurance — why should I consider this type of policy rather than Accident, Sickness and Unemployment cover for my mortgage?

Accident, Sickness and Unemployment insurance (ASU) will cover you for 12 months with immediate effect from when you are off work due to an accident, becoming too sick to work or becoming unemployed.

If you return to work the policy can end and the benefit will stop. The insurer has the right to cancel the policy at any time and it is reviewable and also renewable on an annual basis. This means the insurer can cancel or increase the premium at the annual review date.

There is no deferment period from which the benefit can be taken and in some cases if you receive any employer sick pay you will not be entitled to the ASU benefit until the employers pay stops.

It could also be argued that another drawback of ASU is that you can only cover a percentage of your mortgage monthly repayment plus some additional costs (which will vary from insurer to insurer). This means that while your mortgage payment is covered, you may not be able to cover all of your monthly outgoings.

Permanent Health Insurance (PHI) has a much broader long term outlook regarding its protection of your mortgage repayment. The product is flexible, incorporating a deferment period from when the benefit will start to be paid. This enables people who have employer's benefits the option of a lower premium if they wait a certain period of time before the insurance company begins to pay out.

The main advantage of the Permanent Health Insurance over Accident, Sickness and Unemployment cover is the fact that PHI will pay out over a longer term, until they return to work or their designated retirement age. This will ensure that mortgages can be covered over the long term.

The maximum benefit that can be covered per month is usually 65% of gross income, less any state benefits that the policy holder may be entitled too. This enables policyholders to cover both the mortgage repayment and any other bills that they may have.

The PHI cover cannot be cancelled by the insurer, even after a claim has been made, meaning that some form of cover will always remain in place.

Permanent Health Insurance is a more prudent long term option for protecting your mortgage repayments. Not everyone will recover within 12 months of becoming ill and be able to return to work and therefore PHI cover will ensure that these people can maintain a standard of living similar to that of when they were working.

For further information on how PHI can benefit you, look no further than advice from E J Folkard Financial Services. We want to help to save you both time and money by searching the Permanent Health Insurance market on your behalf to find you the best to suit your individual circumstances. Why not call us now and get a quote, it costs nothing. We offer a truly independent UK whole of market service.

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