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Any of us worry about how our families would manage financially if we were to die. Quite rightly, we want to look after our loved ones against financial stress should this ever occur.

Nowadays we are living in an environment that revolves around unemployment, which is increasing the health risk around the world. The rise in stress for lack of work has driving millions to misery and poor health.

To frost the cake the environment is polluted with harmful chemicals and other pollutants that are claiming many lives.

If the matter is bad enough, we must consider the car accident increase, driving and drinking incidents, and other related incidents that are claiming lives.

Thus, another area of problem in this crazy system of things is cutbacks in employment, or illnesses that force a person out of work temporary. This is where Short-Term Income Protection Insurance comes in handy.

Strangely enough, the one thing we rarely think about how they - and we - would survive financially if a terrible illness struck, but we carried on living, not just for a year or two but quite possibly for a very long time.

That's where permanent health insurance, or PHI, comes in. PHI pays out in the event of an illness that prevents you from working.

It will pay up to 60 per cent of your salary free of tax (or 75 per cent if it is an employer's policy - but you are taxed on the income) either until you are able to resume work again, or until the plan expires, normally somewhere between 50 and 65 years of age.

Like other types of insurance, PHI contracts are agreed for a certain number of years, typically until retirement, or earlier by agreement.

Prior to checking out your PHI check whether you have some form of PHI cover through your employer. If you don't, find out what your employer's sickness payment scheme offers. This is for the reason that generally, though not always; PHI policies are timed to break down after a sickness scheme runs out.

Now you have to decide on the following:

When you want your PHI to start. This can be at any time from four weeks to two years after you become ill, depending on the plan. Many people tend to start payouts as soon as their company sickness benefits end. But the longer you hold out, the lower the cost of monthly premiums.

Choose which type of cover you want. There are three types:

Increasing claim: During the course of a claim benefits increase by five per cent. Premiums will be extremely expensive at the outset.

Increasing cover: Both benefits and contributions increase by five per cent annually. This type of policy is trying to match premiums with income, which works out to be a bit cheaper in the long run.

Level cover: Benefits and contributions remain level all through the plan term. This is cheapest, but the benefits will be eroded by inflation.

Decide how much income you want to protect. The most common rule is that the income paid out by the policy, plus any other income from sources such as statutory sick pay, state benefits, and any other insurance must not equal to more than three-quarters of your pre-tax earnings over the previous 12 months.

In the case of the self-employed, your insurer will calculate assumed annual income by taking an average of three years worth of taxable earnings. However, the income you receive is free of tax, so you won't be as badly off as this sounds.

Short-term income protection insurance is an added coverage to life insurance and provides extra cash to cover the family's requirements when one partner is ill.

Insurance companies can offer the "basic sick and Incapacity" coverage, but these polices offer less for more. Short-term income protection plans however, can provide relief by offering "tax-free income" to families up to a year.

This will help cover costs when you are out of work temporarily, or else if you are ill with a short-term illness. Critical Illness Coverage has a plan integrated in the policies that will also cover policyholders; however, many plans may not cover short-term illnesses.

Since the plan is designed to cover long-term illnesses, you may not have the cash available when you are out of work temporary. In addition, you may want to review your Life Insurance Policy, since few will often short-term coverage.

It makes no sense to take out an extra policy if you already have the coverage. However, it makes sense to purchase Life and Short-term Income Protection Insurance, rather than taking out one or the other. This is because Short-term Income Protection plans and Life Insurance coverage is often cheaper in pairs.

Furthermore, you will need to checkout the insurances available to ensure you get your money's worth. Some companies offer less for more, while few companies will give you what you deserve.

You may even want to take out Life, Short-term Income and Critical Illness coverage, since the Critical Illness plans will make a way out when health is going down hill.

The Short-term is just as it says, short. So you may have short-term income protection insurance for maybe a year at the most, but after that, you will have a deduction in your insurance because this plan will be removed.

If you choose to purchase a lifetime policy, the Critical Illness coverage will last a lifetime. The plan covers more than or up to 20 diseases and illnesses, offering a large sum of cash if you should fall ill permanently.

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