PILOTS INSURANCE - INCOME SICKNESS PROTECTION

PHI INCOME PROTECTION INSURANCE - SICKPAY COVER - FOR AIRCRAFT PILOTS

Pilots unlike many occupations, have to pass rigorous health checks to obtain a Class 1 Medical Certificate. Commercial Pilots are required to attend a regular medical test assessments annually until age 40, then 6 monthly until age 65 [ which is the age at which Class 1 medical privileges are revoked ] 

Strangely therefore some mainstream UK Insurers have withdrawn offering PHI Income Protection terms to Commercial Airline Pilots. Also some may limit cover upto age 55 or 60, rather than age 65. This may seem an unusual move given generally as a profession Pilots must be medically fit to perform their job role to fly an aircraft. Likewise an Insurer may premium rate those who may have a private pilots license. 
 

As an Airline Pilot wether flying an Airbus or Boeing - it is important an insurer may offer claim terms to you meaning being unable to perform your specific job role under your "own occupation" status ie; flying an aircraft. The alternative terms is covering you in a similar "suited occupation" status - which for some maybe an unsatisfactory definition.

Other insurance risks which generally may affect if an insurer will offer cover is which countries & places you are usually flying to. 

PHI Income Protection Sickness - Pilots - Broker Advice

PHI Income Protection Insurance for Pilots ~ Typical Key Features 

• Designed to pay out Income to cover lost salary/wages not lump sum on accident or sickness
• Usually has a waiting or deferred / waiting period from 1/4/8/13/26/52 weeks 
• After Covid 19 in 2020, many Insurers removed short deferral periods
• PHI benefits are currently paid out tax free on claim until you return to work or plan end date
• Income Protection PHI wage cover can usually run upto age 65 for Pilots
• 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 most 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. 

How does Income Protection Insurance for Pilots work ?

If you can't work because of illness or disability, an income protection plan (also called income protection insurance,  income protection cover, income protection life insurance, salary insurance, salaries insurance, wage insurance, wages insurance, earnings insurance, sick insurance, sickness insurance, income insurance phi, income life insurance, permanent health insurance or phi ) aims to pays out a tax-free 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. 

If you are employed this means that dependant on the Insurer - 50%/65% 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. Note that the old PHI Insurance rules used to be based on 75% of income but then taxable (so beware of swopping these old plans without advice). 

However, some employers arrange group income insurance protection for their employees as a perk of their job, which can pay out an long term sickpay income after the statutory sick period. So check what you are entitled to.

So tell me about Permanent Health Insurance (PHI) for Airline Pilots

PHI Sickness Insurance For Pilots - 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. 
# 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.
 

PHI Insurance for Aircraft Pilots - Own Occupation Basis  ?

Normally the best terms are simply if you can't do your normal job "own Occupation" as say a Commerical Airline Pilot

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 a Pilot.

Most PHI policies would pay out until your reach age 65 or when you have chosen the cover to end.

Different Uk Income Protection Providers put the same job in different risk categories.
Does the cover increase in line with inflation?

Loss of License Pilot Insurance

Is "Loss of licence insurance" not the same thing ie; would this not pay my income if I cannot work due to illness as an airline pilot ? A Loss of License Insurance policy payouts out if your licence is suspended for medical reasons or lose your licence permanently. These plans however unlike Income Protection, may just cover you for temporary monthly benefits or often payout a one off lump sum payment.

Why not just take out Critical Illness Life Insurance Cover for Pilots
- instead of PHI 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 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.

Income Protection Quote - Airline Pilots

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