Permanent Health Insurance (PHI), also known as 'income protection' and 'income replacement', provides a tax free income if the policy holder becomes unable to work through illness. An income is paid until retirement age or until the policy holder is able to return to work.

PHI does not normally cover unemployment and may exclude some illnesses such as HIV/Aids.

There is a period following the accident or illness which must elapse before the policy begins to pay. This can range from a month up to a couple of years, with a shorter period resulting in higher premiums being required. Premiums are also dependent on the monthly income required, age, current state of health and occupation.

Many company pension schemes include some form of permanent health insurance as part of their benefits package.