If you're an expat worker living abroad, what would happen if your parent fell ill back home? Greg Becker looks at an Indian innovation
A life insurance policy is unusual in that the life that dies will not benefit from the product.
Yet it could be argued that those who take out life insurance policies on their own life do benefit from the peace of mind that their beneficiaries will be financially secure after they have gone.
Individuals may benefit more directly from other types of insurance. Most obviously from income protection (IP), which replaces income in the event of an illness that prevents someone from working.
Or critical illness (CI) cover, which can help with the payment of medical expenses, care costs and make a contribution to replacing lost earnings.
Unfortunately, the risks an individual faces are not limited to trigger events that solely affect their life.
Consider the case of a sick child that forces a parent to stop working and stay at home to look after them.
In this case, a child CI benefit would give the parent more financial freedom when making the decision to stay at home and become a full-time carer.
Interestingly, a parent is more likely to require prolonged care than a child, and yet we don't traditionally consider cover for that eventuality.
While we regularly see children's CI benefits, the UK market is yet to see a CI policy offer benefits on the parent of the life insured included.
There are a number of reasons for this, notably that some UK parents are comparatively financially secure and adequately resourced, the state generally takes care of their health and care needs through the NHS, and the premiums would be much higher than those for a similar child CI benefit, which precludes making this a ‘free additional benefit'.
PARENT POWER IN INDIA
But this is not the case in other parts of the world. An Indian expat may have parents living in India who would have traditionally been cared for by their children.
The Indian expat may not want to break with tradition, but may be forced to be apart from their parents.
ICICI Lombard of India has developed a product that is bought by expatriates who are looking to provide financial security for their parents in the event of their illness.
The company markets the product as Rishtey Parents Health Insurance and makes it available to individuals resident anywhere, with the only proviso being that the medical benefits are provided to their parents in India.
As an example, a single premium of about £300 provides a cashless hospital benefit of up to about £4,000 to be paid in each of the following two years this covers many health interventions in India.
The benefit is provided in one of more than 4,000 medical facilities in their Indian network.
The application process is impressive, with toll-free numbers supplied for various target markets (including the UK, the US and Canada), which call ICICI in India. There is also a useful chat facility, which is able to resolve immediate questions from the internet consumer.
Policies can be bought online using a credit card, and the lives being covered are medically underwritten in India within two weeks of policy inception for a fee of just less than £10, which can lead to the exclusion of pre-existing conditions.
As this product shows, distance is no longer a barrier: being thousands of miles away from your parents may not necessarily mean that an individual cannot provide the funding to help pay for their parents' care.
What might this mean in the UK? Numbers from the population division of the UN Department of Economic and Social Affairs suggest that there were 6.5 million international migrants based in the UK in 2010, and that they are already sending significant resources back home remittances amounted to $14.5bn in 2007 alone.
If migrants are sending resources back, is there a protection opportunity, and are insurers with foreign operations or partnerships ideally suited to sell this type of cover?
Greg Becker is product development actuary at RGA
