Difference between health insurance and income protection?

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?

Question asked by Jackie Lam
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Answered by Robert Harvey

This is a very common question. Firstly income protection (IP) and permanent health insurance (PHI) are exactly the same plan; IP is just the new name for PHI.

Income protection and health insurance (sometimes known as private medical insurance) are very different plans with completely different purposes.

Income Protection Insurance

Income protection is designed to payout 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.

Private Health Insurance

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 Insurancee guide for more information.

Income Protection or Health Insurance?

Firstly, these two policies are complements rather than substitutes. When taken out together it means that you would receive prompt and quality healthcare from the medical insurance policy, and 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, although the NHS is far from perfect it is something to fall back on to at least.

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This information does not constitute financial or other professional advice. You should consult your professional adviser or contact us directly on 02084327333 should you require financial advice. It is important to ensure any insurance policy you take out is suitable for your needs.
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