Sunday Independent: Weigh up the cost of insurance

This is a piece we wrote for the Sunday Independent (originally appeared on the 4th of May).

We buy insurance to protect something we own or value. When asked, ‘What is your greatest asset?’ many people will say their family home; the more enlightened might say it’s their health.

Wealth is clearly something which many of us value – however, some people incorrectly mistake their income for wealth.

Cashflow can have endless liabilities stacked against it, which is why believing a person making six figures is ‘wealthy’ is often wrong – when viewed in the totality of their financial position.

Assets minus liabilities equals wealth – that’s a basic accounting equation.

It’s important to have a good understanding of wealth and of what you value before buying insurance. You should also ask yourself if the insurance in question is worthwhile.

The principle of indemnity is that you can’t be insured beyond the loss you experience, and there is always the issue of the cost of insurance versus the risk of the …

Read More

What is ‘Permanent Health Insurance’?

Permanent Health Insurance is an insurance which may be optional or required in relation to a housing loan.  PHI can be arranged as an individual or as part of a group scheme organised by their employer or a trade union. PHI is to provide an alternate income in the event that the individual suffers a loss of income by being unable to work due to sickness or disability lasting longer than the “deferred period”.

This period is typically 26 weeks (although it can be as low as one day or four weeks), so the policy does not pay out until the 26 weeks have passed. The payments are liable for income tax, under the PAYE system, however the policy premiums qualify for income tax relief at the individuals marginal rate, up to a limit of 10% of total income.

The payments could continue until the individual returns to works or the policy cease date is reached, which might be at the age of 60 or 65.

An optional extra usually offer with PHI policies is a “waiver of premium” (wop), …

Read More

What is Permanent Health Insurance (PHI)

Permanent Health Insurance is an insurance which may be optional or (rarely) required in relation to a housing loan.

PHI can be arranged as an individual or as part of a group scheme organised by their employer or a trade union. PHI is to provide an alternate income in the event that the individual suffers a loss of income by being unable to work due to sickness or disability lasting longer than the “deferred period”.

This period is typically 26 weeks, so the policy does not pay out until the 26 weeks have passed. The payments are liable for income tax, under the PAYE system, however the policy premiums qualify for income tax relief at the individuals marginal rate, up to a limit of 10% of total income.

The payments could continue until the individual returns to works or the policy cease date is reached, which might be at the age of 60 or 65. An optional extra usually offer with PHI policies is a “waiver of premium” (wop), this allows the premium on the policy to be waived in …

Read More