Who can benefit from taking out PHI cover?
Anyone who does not get paid by their employer indefinitely when they are off sick from work should consider a PHI policy. Most people would not be able to maintain their standard of living if they had to rely on benefits from Statutory Sick Pay and Incapacity Benefit so PHI could form a key part of their financial protection needs. The need for PHI is not merely limited to those people who are employed. Self employed people for instance if off work due to illness or injury would not receive any benefits from their employer so in actual fact it could be argued that the need for PHI is greater for self-employed people. This makes the need for private insurance provision much greater in order to maintain your lifestyle. 
Permanent Health Insurance cover (PHI) or Income Protection or Replacement policies are designed to provide the policyholder with a replacement income in the event of a long-term sickness or disability. Payments are usually made when the policyholder cannot undertake  their own or any job due to illness or injury (it is also worth pointing out that in the majority of cases cover should be sought that protects your own occupation rather than any).

PHI will pay out a guaranteed level of income every month for as long as your incapacity continues; if necessary until your 65th birthday or when you retire. Normally, there is a maximum benefit payable from such a policy; this is usually 65% of a person's annual income, less any benefits that they are entitled to from their employer and the state, it is important to remember this benefit is paid tax free.

So long as each claim is legitimate a PHI policy can pay out a number of times and the insurer cannot cancel the policy as long as premiums are maintained. Depending on the premium that you're prepared to pay, the monthly benefit payments can be linked to the Retail Prices Index (RPI). This means that they automatically keep pace with the official cost of living, a process known as 'inflation proofing'. 

One if the main advantages of the Permanent Health Insurance is the fact that PHI will pay out over a longer term, until the return to work or the designated retirement age. The maximum benefit that can be covered per month is usually 65% of gross income, less any state benefits that the policy holder may be entitled to. This enables policyholders to cover both the mortgage repayment and any other bills that they may have.

The PHI cover cannot be cancelled by the insurer, even after a claim has been made, meaning that some form of cover will always remain in place. Permanent Health Insurance is a more prudent long term option for protecting your mortgage repayments and other outgoings. Not everyone will recover within 12 months of becoming ill and be able to return to work and therefore PHI cover will help to ensure the maintenance of a standard of living similar to that of when working.

What are Deferred Periods?
A deferred period could also be called a waiting period. It is the period of time that you need to be off work due to illness or accident before your Income Protection Policy begins to pay out. This time period is selected by each individual and is normally dictated by the sickness benefits that your employer/ practice provides.  Deferment periods can range between 1 day and anything up to 24 months dependent on an individual’s circumstances, it is important to bear in mind that the shorter the deferment period the more effect it will have on increasing premiums.