Medical Insurances
People pay hundreds of pounds each year to insure their cars and the contents of their home but rarely give a thought to the bigger question of what happens to them if they are unable to work due to illness, accident or disability. It is often when people are in such position of desperate need that they consider protection in these areas. However the opportunity to protect themselves against these eventualities has been lost by then and, too late, they realise just how wise investing in health and medical insurance can be.
Critical Illness
Critical illness cover is no longer a new concept in insurance. The rapid increase in the western world in conditions such as cancer, heart disease, multiple sclerosis and stroke etc now makes critical illness a core component of any serious financial protection planning.
The principle is straightforward; in the event of the insured being diagnosed as suffering from one of the range of defined critical illness conditions, the insurance company will pay out a tax free lump sum after a survival period usually 14 or 28 days. Critical illness cover is very often combined with other types of insurance such as life assurance so that, for example, a given sum can also be paid out on the death of the insured. The policy may not cover conditions that are known to exist when the policy is taken out. Underwriting is very stringent and a person who is accepted for life cover may be declined for critical illness cover.
Income Protection Insurance (IPP)
IPP also known as Permanent Health Insurance (PHI) provides cover in the event that the insured is unable to work, and therefore to earn a living due to long term illness, accident or disability. In a world where most of us depend totally on our incomes in order to maintain our standard of living, IPP should be a lynch-pin of every financial planning strategy.
The plan is usually set up until the insured’s expected retirement date to ensure that financial hardship does not occur along the way and premium cost tends to depend on the occupation of the policyholder, their age, smoking habits, gender and the period of time that elapses between when the insured becomes ill and when income payments begin to be made normally 4, 8, 13, 26 or 52 weeks.
There can be important variations between the cover offered by different insurers and some policies can offer investment returns. It is therefore vital to choose a balance between the cover you need versus the cost of premium. A financial adviser with knowledge of the permanent health market can help you select the appropriate policy for you.
Long Term Care (LTC)
We tend not to think about how to pay for long-term care until one of our relatives has to go into a residential or nursing home. Average weekly nursing home costs can run into hundreds of pounds. By paying either a regular or single premium, you can add to the amount that may be available through state benefits to fund the cost of such care and in the process preserve and safeguard more of your assets and estate that you can pass onto your beneficiaries.
You should consider as an integral part of your discussion with Adviser, the role that LTC can play in your financial planning as there is no doubt that the need for care is likely to increase as life expectancy in the country continues to rise and, with only limited care facilities available, the costs are also likely to rise.
Private Medical Insurance (PMI)
With National Health Service (NHS) hospital queues still growing, private medical insurance is an appealing though often expensive option. There is now an extensive range of insurance companies that offer quality private medical insurance as a genuine alternative to reliance on the NHS. The plans available are pretty much "what is written on the tin". Therefore you get what you pay for and premiums are worked out on the basis of age and the type of cover required.
There are different types of policies ranging from budget, standard to premium.
At the basic level PMI covers you when you need specialist treatment or you need to go into hospital. Some policies cover you if the NHS cannot provide treatment within a certain period of time. This is an option now pretty much engrained in Government policy in order to reduce NHS queues.
At the luxury end of the market, there are policies that cover a wide range of medical services such as dentistry, eye care and even spectacles. However the more a policy covers the higher the premium is likely to be.
PMI is complicated for those approaching it for the first time. In order to make sure the policy you choose is the right one to meet your needs it is worth speaking to an adviser who has specialist knowledge in medical policies and can guide you through the range of options available on the market as well as the exclusions and terminologies used to describe them. This is where we can help.
Legal disclaimer
These pages provide generic information about various aspects of financial services advice that we provide as well as possible areas of clients’ financial planning needs. We hope they are helpful to you but they do not, on their own, add up to proper investment advice and we cannot take responsibility for anything you do in reliance on them without further discussion with us. Please do not make a decision based upon the information contained within these pages alone. They are not detailed or comprehensive enough to enable you to make an informed decision which is tailored to your circumstances and needs. Please contact us now for tailored advice.