What is permanent health insurance (PHI)?

Permanent Health Insurance (PHI) is the standard term used for income insurance cover that comes into effect when you're unable to work for a significant period due to illness or injury. It's a popular employee benefit in the UK, as it should give people the confidence to know that they will still receive a monthly income come what may.

In most cases, employers will pay your sick pay for a fixed period when you're off with illness or injury, and your PHI cover should ideally kick in as soon as this period ends. However, this isn't always the case, particularly where the insurer's terms and conditions for eligibility and payments differ from those in your contract of employment or employee handbook.

When this happens – which will often be when you're in a financially vulnerable situation – you may want to consider talking to an experienced employee health insurance solicitor to see if we can help. You can call us on 0330 041 5869 or contact us online and we'll call you back.

What does permanent health insurance benefit include?

When you make a claim under a permanent health insurance policy, you’ll need to meet several eligibility criteria, which will usually require medical evidence. Under the policy, you’ll receive a fixed percentage of your usual salary (often between 50 and 75%) for a set period. This could be:

• A fixed period (e.g. two or three years)
• Until you are well enough to return to work
• Until retirement age

Can I be sacked while claiming on a PHI policy?

While PHI is a popular benefit for employers and employees alike, the sad fact is that employers sometimes lose interest in employing someone who's on long-term sick leave, funded by their PHI policy. In some cases, this leads to employees being unfairly dismissed while off work following accidents or illness, which in many cases means that benefits under the permanent health insurance policy will end.

It's also true to say that some of these cases involve discrimination against employees suffering from a disability, which is one of the nine protected characteristics under the terms of the Equality Act 2010. Importantly, conditions such as stress, depression and chronic fatigue syndrome may count as disabilities under the Act. If you've been dismissed for a disability such as this, even while claiming on a PHI policy, you may have a right to make a claim for unfair dismissal and discrimination at an Employment Tribunal, as well as to claim for any lost permanent health insurance benefits.

PHI and other employment benefits

If you’re unable to work for an extended period due to poor health or illness, claiming on a PHI policy is a good way to protect your income and reduce any financial pressure. However, while you are claiming on the policy, you may find that it has an impact on other employment rights, including:

• Your holiday entitlement
• Your notice pay
• Auto-enrolment on a pension scheme
• Any expected changes in salary
• TUPE

Why choose Slater and Gordon?

Being forced out of work due to poor health and illness can be incredibly stressful, and it is understandable that finances can be a concern. If your employer offers a permanent health insurance benefit, it can be a good option for securing income over a long period of time while you recover. However, when things go wrong, it can be difficult to know what to do next.

If you aren't receiving the permanent health insurance benefits that you believe you're contractually entitled to, it's worth seeking the advice of an experienced employment law solicitor. We've already recovered a substantial amount of lost permanent health insurance benefits for our clients in a number of high-value settlements.

Our friendly and compassionate employment team have an outstanding track record of success cases relating to health benefits such as permanent health insurance, and many of our solicitors have received recognition from esteemed legal publications such as Chambers and Partners and the Legal 500. With a wealth of experience and expertise, you can trust that you are in good hands.