WHAT would happen to you and your family if suddenly, through sickness or disability, you were unable to work again? Apart from medical expenses, there are school fees, rent or mortgage repayments and a host of day-to-day living expenses. Whatever savings or investments that have been put aside will be quickly eroded. A hefty life insurance policy is no good to the family because you are still alive. So what is the alternative? One product available, but not often talked about, is permanent health insurance (PHI), which covers income replacement. Many insurance brokers see it as being more important than life insurance, especially if you are married with a young family. PHI replaces loss of earnings when the insured, through accident, injury or sickness, ceases to be employable. Mr Miles Standish, director of Towry Law International, said: ''The problem trying to sell PHI is that most people don't think that it can happen to them.'' Mr Ian Ferguson, head of financial services with Hill Samuel, said: ''It is a strange fact of life, but people know they are going to die sooner or later. What they don't accept is that they might have a heart attack.'' Statistics for Hongkong are difficult to attain, but in Britain about 750,000 people were declared unfit for work last year and many of these were classified as being long-term sick and unable to work again, according to Social Security Department figures. The figures also showed men are 10 times more likely than women to have a breakdown in health lasting more than four weeks. Mr Standish said a survey showed insurers identified PHI as essential cover for high income earners who have much to lose if personal disability jeopardises their earnings. Mr Patrick Tuohy, regional manager for Clerical Medical International (CMI), said: ''If I was a financial adviser, I would be advising all my clients to take PHI cover.'' He said the probability of being off work for more than six months was greater today than dying. ''The need is definitely there because the risk is there,'' he said. ''Most expatriates who come to Hongkong to work are covered for 12 months by their in-house medical or insurance schemes. But that's it. ''Obviously these policies are a lot more expensive than personal accident policies and the older you are, the more expensive the premium because someone has to take on that liability until you retire at say 65.'' Mr Ferguson said that although PHI ''has its benefits I would suggest lump sum policies''. ''At least that way you or your family have a say in what you can do with the money. ''Today's insurance market is all about flexibility and choice. At least with a lump sum payout you can spread the investment. PHI offers you none of that.'' Mr Steve Cumming, an Australian financial adviser, said there were a number of PHI policies available in Hongkong. ''Although PHI offers you a salary, it is important to note that here in Hongkong the policies on offer cover 75 per cent of your salary up to a maximum of about $50,000 a month,'' Mr Cumming said. ''Another thing people have to look for is whether or not the policy is guaranteed renewable. That is to say, the company will renew your policy. ''It is also important to know how they define disability. While you may not be able to proceed with the job you were in, you might, under some definitions, be able to work in some other capacity.'' Mr Cumming said people should not be ''taken in by all the glossy advertising''. ''These products are good,'' he said. ''But people should read the fine print first before taking one out. And if they don't understand it they should seek the advice of someone who does. ''For example, Hongkong Bank offers a PHI policy, underwritten by Carlingford, called Income Assurance. But this only covers accidents. The point is, statistically, less than five per cent of people who are off work long-term are off work due to accidents. If you can't work due to illness the policy will not cover you. ''National Mutual has one of the better PHI policies available in Hongkong, covering illness and accident, plus they are guaranteed renewable. ''AIA has an accident only policy and Aetna has one covering both accident and illness which is quite a good policy. ''The best advice is to look for the policy which gives you the broadest cover. Obviously age will be important and salary as to what premium you pay. ''The point with all these PHI policies in Hongkong is that they only cover salary replacement up to a maximum, in most cases of $50,000. There are policies offered outside Hongkong which will cover salary plus package but because they are not licensed here cannot be marketed.''