What happens PHI in payment when the employer ceases

[jasdpace@gmail.]

Following an accident, a relative has been on PHI for almost 10 years. She's about 50 and won't ever be able to work again. She tells me that technically she's still an employee in that her contract of employment was never formally terminated. I just heard this morning that her employer (a small company) has recently announced its intention to cease to trading. I'm concerned about the impact that this will have on my relative's PHI. Does the PHI come to an end when her employer ceases? Is she obliged to advise the insurance company? Presumably, the answer to both these question is yes but it seems a bit unfair?

 

[jpd]

I would have thought that the payment is coming from the insurance company, not the employer

 

[thedaddyman]

PHI would normally come from the insurer. I have seen cases in the past where someone got moved onto early retirement with the agreement of the relevant pension scheme so that might be an option but a lot will depend on the commercial agreement between employer and insurer.

She may also have an entitlement to redundancy if the employer has ceased trading but that could be dependent again on the circumstances of her move to PHI

 

[LDFerguson]

If it was a group PHI scheme, usually the insurance company pays the claim to the employer who then continues to pay part of the salary to the employee. If the employer winds up, she can arrange for the claim to be paid directly to her by the insurance company. They will deduct taxes under PAYE.

 

[jasdpace@gmail.]

Thanks Liam,

It's an individual PHI policy - not a group PHI scheme. [She was lucky in the sense that she had a good financial adviser who put this in place for her.] I remember her telling me that she had been advised not to terminate her employment - even though there was never any prospect of her returning to work. Does this make sense? Will insurers still pay out when there is no job to return to because the company ain't around? Does the practice differ between insurers?

 

[LDFerguson]

Does the practice differ between insurers?

It does. Some insurers will continue paying a claim on the grounds that she's unable to work anywhere. Others will terminate the claim because she's effectively been dismissed from the job. Only way of knowing for sure is to (a) ask her broker to confirm or (b) read through the policy conditions of her policy.

 

[jasdpace@gmail.]

Thanks Liam,

This is now getting to the heart of the question. I think she's with Friends First or Irish Life. Rather than unnecessarily worrying her, before mentioning anything to her, do you know what the standard practice is for each of these insurers is?