Necessity of PHI

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Warren

Registered User
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Hi guys,

I am just doing a review of my financial situation and I've been wondering whether I should consider PHI.

Right now my employer will pay my full wages for up to 26 weeks if I am out sick. They also provide a Long Term Disability Scheme which pays 2/3rds of my basic salary less the State disability benefit. This disability payment is increased by 5% p.a. until retirement (if necessary).

A couple of questions on this

1. Should I consider cover for the other 44%? I know this will depend on my overall financial situation but assume I am a regular Joe (mortgage with mortgage protection/DTA, 1 child, a small amount of savings)

2. Is it possible to get cover for the other 44% or can I only get cover for 11% - i.e. so that my total cover is only for 75%

3. If I get cover on the 44% can I get tax relief on the complete premium?

Thanks,
Warren
 
Personally I would be inclined not to (if it was me) and would be looking at saving/investing the money that would otherwise go on premiums towards an emergency backup fund. Of course what's appropriate does depend on your specific overall circumstances.

Why do you think that you might only get cover for 11%?!

Bear in mind that income protection policies vary and some may involved hefty charges/commissions, only pay out in very specific circumstances and (maybe?) for limited periods of time. Ditto for mortgage repayment protection insurance if your have that. Not sure what DTA is...
 
Warren said:
Hi guys,

I am just doing a review of my financial situation and I've been wondering whether I should consider PHI.

Right now my employer will pay my full wages for up to 26 weeks if I am out sick. They also provide a Long Term Disability Scheme which pays 2/3rds of my basic salary less the State disability benefit. This disability payment is increased by 5% p.a. until retirement (if necessary).

A couple of questions on this

1. Should I consider cover for the other 44%? I know this will depend on my overall financial situation but assume I am a regular Joe (mortgage with mortgage protection/DTA, 1 child, a small amount of savings)

2. Is it possible to get cover for the other 44% or can I only get cover for 11% - i.e. so that my total cover is only for 75%

3. If I get cover on the 44% can I get tax relief on the complete premium?

Thanks,
Warren
Click to expand...

Your employer already provides PHI as highlighted above. Most likely as an add on with D.I.S. as part of a pension arrangement.

Max insurable is 75% less s.w. (I assume your are class A1 for PRSI purposes). So you could in theory insure the 11% balance privately, but I've never seen that done tbh.

Perhaps look at something like an AVC PRSA? Tax/PRSI relief at source, and the abilty to run your own little pension.
 
ClubMan said:
Personally I would be inclined not to (if it was me) and would be looking at saving/investing the money that would otherwise go on premiums towards an emergency backup fund. Of course what's appropriate does depend on your specific overall circumstances.

Why do you think that you might only get cover for 11%?!

Bear in mind that income protection policies vary and some may involved hefty charges/commissions, only pay out in very specific circumstances and (maybe?) for limited periods of time. Ditto for mortgage repayment protection insurance if your have that. Not sure what DTA is...
Click to expand...

Thanks ClubMan. Perhaps your right about saving/investing the money. The 11% is covered below by RS2K and I just found on the Friends First web site that the maximum benefit allowed on an Income Protection plan is calculated as 75% of the first €82,000 of your earnings plus 33% of the balance, less social welfare benefits. Unfortunately Im under the 82,000 so the max I could cover is 75%.

DTA is Decreasing Term Assurance

RS2K said:
Your employer already provides PHI as highlighted above. Most likely as an add on with D.I.S. as part of a pension arrangement.

Max insurable is 75% less s.w. (I assume your are class A1 for PRSI purposes). So you could in theory insure the 11% balance privately, but I've never seen that done tbh.

Perhaps look at something like an AVC PRSA? Tax/PRSI relief at source, and the abilty to run your own little pension.
Click to expand...

Thanks RS2K. Yes Im A1. On reflection I guess covering the other 11% might have been a silly thought. I know I could survive on 66% of my wages and I would be better of investing the difference. Im already contributing to an AVC through the company pension plan so Im sure the money would be better spent there.
 
RS2K said:
You'd get social welfare benefits too.
Click to expand...


Well the 66% includes social welfare payments.

I may now take a look at serious illnesss cover. I had figured that PHI was more important but now that Im covered on that front Ill take a look at the serious illness cover
 
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