PHI INCOME PROTECTION INSURANCE - FOR BUSINESS OWNERS
Running a small or large business can be both physically & mentally challenging choice of job - dependant on your type of work. If you are say a "1 man band" sole trader business or a medium sized business - you may have thought before about the implications of short or longer term income protection on business arrangements.
Nobody wants to think about being off work sick or having an accident say injuring yourself - but unfortunately many Business Owners themselves do suffer from some form of accident, injury or illness during their working life.
Most Business owners cannot get by on limited government benefits...the figures will not add up. If you are off with any longer term illness - you will need to make arrangements for yourself.
Business Owner - Income Protection - Broker Advice
Business Income Protection Cover ~ Typical Key Features
- Designed to pay out Income to cover lost salary/wages for yourself or the business not lump sum on accident or sickness
- Usually has a waiting or deferred / waiting period from 1/4/8/13/26/52 weeks
- Personal PHI benefits are currently paid out tax free on claim until you return to work or plan end date - With tax paid on the premiums (paid from after-tax earnings) & the benefits are tax free,
- An executive income protection plan / directors plan the premiums can usually be classed as trading expenses but the benefit paid out will incur income tax and national insurance contributions.
- Income Protection PHI wage cover can usually run upto age 65/70 - state pension ages are now variable from 65 upwards
- Income Insurance Benefits may be level or inflation linked
- Medical evidence is required to underwrite before any terms offered
- Premiums may be none-reviewable, annually/5 yearly reviewable or age costed
- Budget PHI salary cover may run upto age 65/70 but payout for only 12/24/60 months upon any claim
- Cover may be based on maximum of say 50% to 65% of your gross earnings
- Waiver of Premium (where the Insurer waives/protects & covers your premiums after a deferred period of 4/8/13/26 weeks due to sickness or accident) so you do not have to pay them in claim
Government benefits are very similar to unemployment insurance ie; probably insufficient and so people would probably see a very substantial drop in their income if they were out of work, even for more than a few months because of illness or disability.
FOR PROTECTION PRODUCTS WE USUALLY OFFER FROM A RANGE OF PROVIDERS
For products with an investment element we will introduce you to an authorised adviser
Income Protection Insurance Quotes - for Small Business Owners
If you can't work because of illness or disability, an income protection plan aims to pays out an income.
"PHI Income Insurance" tries to put you back into the same situation you were in before you were ill. But it does not allow you to be better off sick than well. So the maximum amount of income you can replace is the after-tax earnings you have lost, less an adjustment for any Uk State benefits you can possibly claim.
This means that dependant on the Insurer - 50%/65%/75% of your gross income but then paid out tax free. If self employed then this is usually based on last 12 months annual net profits ( beware of swopping these types of plans without advice). So check what you maybe entitled to based on your profits at the last tax self assessment.
Tell me about Income Insurance for Business Owners
PHI Sickpay Insurance For Business - Underwriting & Health Issues
You pay a monthly premium throughout the term of the "Income Insurance" policy. Cost depends mainly on:
# Your age - at the time you start the policy. Older people are more likely to suffer an illness, so pay more.
# Your sex - gender no longer affects rates wef 1/2013 via income providers.
# Your health - at the time you start the policy. If you have existing health problems you might be refused cover or have to pay more.
# Your Occupation - some jobs are more likely than others to contribute towards illness or accident - for example you regularly work at heights above 40 Ft
# Hobbies and lifestyle - for example, rock climbing is high risk, so you'll pay more.
# Smoker Status - for example, smoking makes you more likely to make a claim, so you'll pay more than a none smoker.
# Waiting period - once you claim, there is a delay before payments start. You can choose how long this is - for example, from 4/8/13/26/52 weeks up to 104 weeks usually dependant upon occupation. The longer the waiting period, the less you pay.
If your health is poor or your lifestyle is considered risky, you may be refused PHI cover or have to pay more than normal.
Business Income Protection Insurance - Own Occupation Basis ?
Check whether you already have protection in place in case you get incapacitated, and for how long that protection would last. For example you may have a payment protection insurance that covers your mortgage.
Normally the best terms are simply if you can't do your normal job "own Occupation" as say a self employed Accountant.
Some income protection policies only pay out if you can't do any work, but you would have to be seriously incapacitated for you not to be able to work at all. Others cover being unable to do any work for which are "Suited Tasks" similar to being say a vet.
Most PHI policies would pay out until your reach age 65 or when you have chosen the cover to end.
Check how different occupations are treated. Different Uk Income Protection Providers put the same job in different risk categories.
Does the cover increase in line with inflation?
Why not have Critical Illness Insurance Life Cover for a Small Business Owner
- instead of Income Insurance ?
Critical illness cover (CIC) - pays out a tax-free lump sum if you are diagnosed with a life-threatening condition for example some forms of cancer, heart attack, stroke, diabetes etc; as specified and listed in the policy - is a possible cheaper and simpler alternative to Income Insurance.
But there are lots of common situations when CIC would not pay out - for example, if you had back problems or maybe a stress-related illness. Additionally, not all occurrences of the critical illnesses listed are covered, for example some lesser forms / early stages of cancer maybe not covered. Ideally you should have both plans if your budget allows this. For more information on this & costs talk to a professional broker here.
Is PHI Income Insurance for a Business - the same as Accident & Sickness Cover ?
Accident, Sickness &/or Unemployment insurance (ASU), can also be referred to confusingly as Income Protection, if doing research online, although it is a different product. ASU cover will provide you with an income to meet your outgoings if you are off work sick, have an accident or are made redundant. It pays out a monthly benefit to cover your mortgage/loan and other related costs but for a limited period.
You may choose the amount of benefit you would like to receive - although there are some limits on the maximum amount. The premium will be a percentage of the amount of monthly benefit you would like to receive. NOTE: Benefits are usually payable for a maximum of 12 or 24 months - unlike Income Insurance PHI which may pay up to when you retire usually age 65.
Some policies will also allow you to choose whether you want to receive benefits for accident and sickness only, unemployment only or all three. Most policies will also have a 'deferment period' usually 30 days. This is the period of time you will have to wait after losing your source of income until you may claim the policy benefit.