Sickness Insurance: Guarding Against Sickness
Sickness insurance, often called permanent health insurance, protects your income if you can’t work or have to take a cut in pay because of illness.
• Choose a policy which takes inflation into account so that you receive an increasing income if you are ill for a long time.
• Avoid policies which cut off your benefit if the insurance company thinks you can go back to work in a lesser capacity.
• If you are a woman thinking of starting a family, choose a policy which pays out if you continue to be ill after giving birth. Pregnancy itself is not covered.
• Some policies provide for partial disablement. They make partial payments to people who can return to work for less pay, or get another job which pays less than they used to earn.
• Don’t over insure. To encourage you to go back to work, insurance companies won’t allow you to claim full pay if you fall ill. Even if you are insured for more, most offer no more than 75 per cent of your earnings, less an amount for state benefits.
• Housewives beware. Only a handful of companies will insure the value of work done in the home by a non-working partner. Look for a company which doesn’t restrict cover.
Reducing the cost of sickness insurance
The cost of sickness insurance varies enormously from company to company, so shop around.
High premiums for women
Women in particular need to search for value for money. Insurance companies claim that although women live longer they fall ill more often than men and for longer. Women can be charged up to a half more for sickness insurance than men.
Check what sick pay you’ll get from your employer, including state benefits. Some companies keep employees on full pay for the first three months, six months or even a year of an illness. Check your company pension plan too; you may be entitled to retire early on a reduced pension.
Deferring the payment
Depending on your firm’s sick pay, you can choose when the payment from sickness insurance should start. A policy which starts paying after six months is cheaper than one which pays immediately. Most companies offer four-week, three-month, six-month and one-year deferment periods.
Applying for life and sickness insurance
• Answer all questions honestly or your insurance may be invalid.
• You may be asked to go for a medical check-up with your own doctor in which case you have the right to see the report before it is sent to the insurance company.
• If you are taking out a lot of insurance, the insurance company may send you to one of its own doctors. In that case you can’t see the report.
• If you are refused insurance or the normal premium is increased, the insurance company may put you on the Impaired Lives Register. This is kept by the Association of British Insurers (www.abi.org.uk/), and is open for inspection by other insurance companies. For a fee, you have the right to see what is written about you, and have any errors corrected.