Restrictions imposed on PHI cover - should I bother?

I applied to Friends First for permanent health insurance/income protection and they have accepted me with one big exclusion - Parkinson's disease.
I wasn't really surprised as there's a history in the family. Now I'm wondering if the level of cover they are prepared to offer is worthwhile?

I'm in my 40s with no health problems. Myself and partner both earn about €50k a year each, the mortgage is paid off and we're making maximum contributions to SSIAs and pensions. We live modestly so have a good deal of spare cash. I've full PRSI contributions so, in worst case scenario, I'm entitled to disability payment.

Is it reckless to rely on social welfare plaus savings in the event of illness? It's looking like a better option than an insurance policy which, in my case, would have a gaping hole in the cover provided.

I don't believe in PHI in general -- most people would be better off saving the premiums instead. This applies especially in your case, where they are not prepared to cover your biggest risk. Plus PHI tends to only kick in after 13 or 26 months of illness. So you'd need another safety net anyway. The PHI key post at http://www.askaboutmoney.com//showthread.php?t=5583 makes other relevant points, including that PHI payouts are often calculated *after* social welfare has been taken into account!

I couldn't disagree more strongly. About 60% of PHI claims relate to stress and back injury. It's reckless in my view not to protect your future income stream from ill health risk. Payouts escalate with an index like 5% and the potential payout to 65 could be huge. I would urge you strongly to protect yourself and to disregard spurious analysis like that being uncovered is better value. Its better to be covered than trying to pursue a claim for negligent advice from an anonymous poster!!

As far as I can see MugsGame was simply giving a personal opinion. Obviously MoneyBags would be better off obtaining independent, professional advice on his own personal situation than acting solely on the advice of any anonymous bulletin board poster who recommends that he should (or shouldn't) take out PHI. I'm not sure why you mentioned stress and back injury specifically but if you have any (even minor) history of either of these then the PHI underwriter will often limit or even exclude cover for these, only cover them with significant loadings or even decline cover altogether. As with any insurance cover the devil is in the detail and the detailed terms & conditions should be studied to make sure that the cover is suitable for the individual's needs and that any limitations are understood (e.g. some PHI policies only cover very specific lists of specific ailments and not anything else).

Thanks for the feedback - it has really helped me gather my thoughts.

I'm still not convinced that PHI makes sense for me because of the exclusion on Parkinson's. Thankfully, I don't have a family history of heart disease or stroke, which seem to result in a lot of people being forced to give up work early.

I wonder if there would be so much stress or bad backs if there people did not have PHI cover? I know the insurance companies vet claims carefully but stress is a grey area where it's hard to prove or disprove a claim. It's possible that stress could deteriorate rapidly if there was a chance it could provide a back door to early retirement. In any event, I'd hope to have the foresight to switch jobs long before stress got to the stage where I'd have to claim on PHI.

PHI cover is expensive - in my case €1,300 a year before tax relief. Yet it won't cover the one condition - Parkinson's - that worries me most. If I don't buy it, I still have social welfare as a safety net that can be topped up from savings.

As regards professional advice, I know from experience that nobody in their right mind will advise against PHI. The risks are just too great. What if I subsequently contracted a disease that forced me out of work? I would have a strong case against the broker who advised me.

Moneybags said:

PHI cover is expensive - in my case €1,300 a year before tax relief.

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Did you shop around as widely as possible for (a) the most competitive quote and (b) the most suitable terms & conditions?

Hi ClubMan,

I did a lot of homework and, in line with previous posts on AAM, Friends First look like the best.

When you apply for PHI, they ask you if other insurance companies either turned you down or imposed restrictions. In my case, the fact that one insurer excluded Parkinson's meant that all the others did the same.

ASAIK, they keep a central register so insurance companies can check out if you've previously had cover refused or restricted.