Advanced Mortgage Services Ltd is an appointed representative of The On-Line Partnership Limited which is authorised and regulated by the Financial Conduct Authority. Advanced Mortgage Services is registered in England. Company registration number 4751565.
Cherry Tree House, 20 Inverleigh Road, Bournemouth, Dorset, BH6 5HA.
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Also known as permanent health insurance or PHI
This is designed to provide you with an income if you're unable to work due to illness, accident or injury. After an agreed period of time (known as the deferred period) the policy starts to pay out. With the most comprehensive policies this continues until the end of the agreed policy term, you can return to your normal job, retire or die, whichever was to come first.
If you're unable to work due to illness you may be entitled to state benefits. But these are modest and you may struggle to meet your financial commitments and maintain your lifestyle. If you're employed your employer may have its own sick pay scheme. But even the most generous scheme may mean a drop in your income over time. And if you're self-employed there will be no employer help and you may have to rely on your savings.
There is usually a deferment or waiting period before this insurance pays out. For example, you may have decided you can manage on state benefits, sick pay from your employer and your savings for a particular period of time such as six months. After this you may want the insurance payments to kick in.The longer the waiting period you choose, the cheaper the insurance will be. The waiting period is usually at least four weeks but can be anything up to two years.
The maximum amount of cover you can have is between 50% and 65% of your pay before tax, depending on the policy. This limit is a total for all the income protection policies you have so be careful not to over insure as you won't be paid more than this.
The maximum figure also takes into account any state benefits you may be entitled to. The idea is to make sure that your after-tax income does not leave you better off than when you were working. Usually this income is paid out until you can return to your job, retire or die, whichever comes first. However, some cheaper policies may only pay out income for a maximum period of say five years. Also watch out for policies which only pay out benefits until you can return to any form of work, not necessarily your usual occupation.
Some policies pay a level income while others pay a rising income which increases each year in line with inflation or a specified amount.
If you arrange your own policy the pay-out is tax-free. If it's a policy arranged through your employer, the pay-out is taxable as if it were salary.
Premiums are based on how much cover you want, if the income is to rise each year, the waiting period, your age, gender, job, health and lifestyle such as if you smoke. However, with some policies, known as 'age related' policies, your gender and occupation don't affect the premium. Instead, your premiums increase by a set amount each year. See our guide for more on the different types of income protection policies available.
Premiums also are affected by the definition of being unable to work. For example, premiums are higher if a policy pays out if you're unable to do your normal job rather than any work.
If you would like to know more information regarding Income Protection Insurance and to provide you with a personalised quotation Please Contact Me.
The plan will have no cash in value at any time, and will cease at the end of the term. If premiums are not maintained, then cover will lapse.
For definitions of illnesses covered please refer to the Key Features and Policy Document.