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- Permanent health insurance is designed to protect a worker in the event they fall ill or are injured and cannot pay for healthcare
- Permanent health insurance is tax-free
- There are income protection plans that can be set in place for permanent health insurance policies
The concept of permanent health insurance is nothing new. It is designed as an insurance policy whose sole aim is to provide income protection in the event the covered individual is forced out of work due to a documented illness or injury. The plan is meant to pay a monthly income to the individual in cases like this until such time that he or she is able to return to work.
In order to make permanent insurance work for an individual, there are typically three definitions that are taken into account. The most common definitions that are used within an income protection policy include:
- Own Occupation – A permanent health insurance policy will pay out benefits to an individual that is no longer able to perform duties in his or her job
- Suited Occupation – This type of policy will pay out only if the individual is not able to perform a job that requires a suited skill set or experience
- Work Tasks – This definition creates a list of specific job tasks. If the covered individual cannot perform a predetermined number of those tasks, then the policy will pay out until such time that those tasks can be completed.
It is a general insurance practice for a permanent health insurance policy to pay a benefit equal to fifty percent of the gross salary that was being earned prior to the onset of the injury or illness.
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Possible Claims With Permanent Health Insurance
Payments issued out on this type of policy are meant to be tax-free and to continue until the insured is able to return to work. In addition, this is not considered to be a supplemental policy. In other words, if an individual is receiving benefits from a permanent health insurance policy, that will not interfere with any other government benefits that he or she might be entitled to as well.
For people who work on a consulting or commission basis where their income is not necessarily stable, the insurance policy can be set up to provide a fixed income for the duration of the plan.
Income Protection Plan
Under this type of policy, many people opt for an income protection plan. This enables the insured to determine how quickly the benefits are paid out in the event that a claim is made. The insurance industry refers to this as a deferred period, which is defined as a seed period of time that has previously been agreed to by both parties. This is an arrangement by which you agree to wait a set sum of days from the day of the initial claim until the policy actually begins to pay out benefits. Type deferment periods are:
- Zero days
- One week
- 30 days
- 13 weeks
- Six months
- One year
- Two years
Similar to a deductible on health or automobile insurance, the longer the deferment period that is agreed to, the lower the policy premiums will be. The length of the period will need to be considered carefully, as it cannot be easily altered.
Self-employed individuals might opt for a short period in order to ensure that they can adequately provide for themselves and their family during a time of illness, while those who have sick benefits might be able to extend the deferment out for a bit. This will help ensure that there is never a time period where any income is not being received.
The length of the period will need to be considered carefully, as it cannot be easily altered. Self-employed individuals might opt for a short period in order to ensure that they can adequately provide for themselves and their family during a time of illness, while those who have sick benefits might be able to extend the deferment out for a bit. This will help ensure that there is never a time period where any income is not being received.
How long do you need permanent health insurance?
Those who have an income protection plan may choose to only keep it in effect up to a certain life stage. Some will keep the plan current until retirement in order to ensure that adequate protection is always there until pension and other benefits begin to kick in. Others might only keep the protection in place until a mortgage is cleared or the children go away and get married.
The shorter term, the cheaper the premiums will be, so this is always an important consideration. One other alternative to reduce premium amount is to agree to limit your benefits in the long run. Covered individuals will
The shorter term the plan is for, the cheaper the premiums will be, so this is always an important consideration. One other alternative to reduce premium amount is to agree to limit your benefits in the long run. Covered individuals will
Covered individuals will be given an income protection policy with a one or two year term. This plan can then be in effect until retirement, but it will only pay out for a maximum of one or two years with each claim.
Benefit Amounts Under Permanent Health Insurance
Since everyone earns a different amount, usually classified by occupation, income protection plans are typically divided into five different classes. The most common delineations are outlined below.
- Working Professionals – Examples include accountants and lawyers
- Executive positions, including managerial and clerical occupations – An example of this class include computer programmers and receptionists.
- Managerial and professional occupations – These includes dentists and veterinarians
- Recognized skilled occupations – Examples include nurses, plumbers, and electricians.
- Manual labor occupations – Examples include agricultural workers, bricklayers, and carpenters.
As one moves down the classification categories, premium amounts tend to be more expensive. Not all permanent health insurance providers will cover those in the lower classes of skilled and labor professions.
The Role Medical History Plays
For permanent health insurance, an individual’s personal health history factors into the type of income protection plan that is ultimately offered. Certain medical conditions that are already known may be specifically excluded under the terms of the policy, so it is advisable to conduct comparisons in order to get the best possible coverage.
The Difference Between Private Medical Insurance and Permanent Health Insurance
There are certainly notable differences between these two contrasting types of health insurance policies. Permanent health insurance is designed to provide covered individuals with a stable income in the unfortunate event that they become sick or injured, causing them to be unable to work any longer. This income will help individuals keep current with their major expenses, such as mortgage or rent. Private health insurance will enable individuals to receive the best possible medical treatment available to them.
Coverage for Critical Illnesses
One additional component of permanent health insurance is coverage for a critical insurance. This is designed as a long-term policy that aims to pay a lump sum benefit upon the diagnosis of an illness that is life threatening. Debilitating conditions are also covered. These can include:
- Heart Attacks
- Various Types of Cancer
- Multiple Sclerosis
- Loss of one of more limbs
The insurance company will pay out the benefit, and then the insured is free to use that money however he or she sees fit. Private treatment can then be sought as well, using the combined benefits for a permanent health insurance and private medical insurance policies.
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