Income Protection/Permanent Health Insurance

[Tedward1]

I am aware that there is normally a deduction of the single rate of Social Welfare Illness Benefit from the benefit payable under a Permanent Health Insurance Policy/Income Protection Policy.

Has this always been the case for policies sold over the past 20 years?

(I'm aware that benefit normally is calculated at 75% or 66% of salary, prior to the deduction in respect of social welfare benefit.)

Anyone ever hear of a deduction of TWICE the social welfare benefit, rather than 1 x times social welfare benefit?

Many Thanks.

 

[JimmyB99]

Hi Tedward1,

Once upon a time, 75% of Sal less the SW deduction was the standard for PHI.

Then in the 1980s, AIDS came along and PHI premiums went crazy whilst insurers tried to understand the risk implications of this syndrome.

In response, many companies reduced the benefits payable for their employees and it's at this time that the twice SW offset became popular. Over time, the risk that AIDS posed became known and was less in general than originally feared. Many companies then reinstated their pre AIDS benefit promise (i.e. 1 x SW) for their employees but some companies kept the 2 x SW in place.

 

[Steven Barrett]

The maximum amount of cover you can have is 75% of earnings less State disability. Your employer can provide whatever level of cover they want. They don't have to provide the maximum permitted.

 

[Tedward1]

Thanks Jimmy and Steven

 

[Summercruising]

Hi I’ve recently found myself on this journey and in process of completing PHI forms.
Is there anywhere I can get comparative examples?
If PHI covers 75%, is it really a smaller % as SW is factored into that?
What is meant by 1 xSW - 1 week deducted (monthly paid)? Excuse my ignorance- brand new territory for me!!
Is it also the case that even at 75% of income it might be slightly more due to tax?

 

[GSheehy]

At any part of the journey were you provided with documentation (for example - page 7) about the product?

You must be dealing with an agent/intermediary to buy the product so is it just that they aren't willing to help you with setting it up and completing the form or are they just not able to explain it to you? Either way, they're going to get paid for not doing their job if you run with this plan.

Comparative examples of what? Is it a tied-agent you're buying from and not a broker?