What's the Shortest Deferred Period I Can Have?
Question asked by Ben Sawyer
I want some kind of health cover in case I am ill. I’ve come across Health Insurance, Income Protection and Permanent Health Insurance – what is the difference?
This is a very common question. Firstly Income Protection (IP) and Permanent Health Insurance (PHI) are exactly the same plan; Income Protection is just the new name for PHI.
However, Income Protection and Health Insurance (sometimes known as Private Medical Insurance) are very different plans with completely different purposes.
Income Protection is designed to pay a monthly benefit if you are unable to work due to illness or injury, which can be used to keep up to date with your rent / mortgage and other monthly costs.
On the other hand, Medical Insurance is designed to pay for healthcare treatment in private hospitals and these days most insurers will settle the medical bill directly with the hospital or consultant.
Please see our Private Health Insurance guide for more information.
Firstly, these two policies are complementary rather than substitutes. When taken out together it means that you would receive prompt and quality healthcare from the Medical Insurance policy as well as an income whilst receiving treatment and making a recovery from the Income Protection policy.
However, given the very low level of state incapacity benefit, the first port of call is usually Income Protection so at least all your essential bills are paid for each month. After all, we’re fortunate in the UK to have the NHS which provides healthcare free at the point of use and so there’s generally less need for Private Medical Insurance than for Income Protection.