Caroline, 25 and Ben, 26 would like to purchase private medical insurance (PMI) cover. Being a young couple on a tight budget, they want to keep costs as low as possible and can currently afford a maximum monthly premium of £50 each. Ben, a smoker, is an amateur rugby player and has a shoulder injury resulting from frequent dislocation, other than this he is healthy. Caroline is also a smoker, but has no health problems. The couple have joint savings of £8,000. They are planning to start a family in the next couple of years and would like the option to extend cover in the future to include the whole family. What are their cover options?
Although Caroline and Ben are on a budget of £50 each this should allow them a level of flexibility in the scheme that they choose.
It is unlikely that Ben's shoulder injury can be covered, as this is a pre-existing condition, which has a tendency to reoccur. With PMI the fact that they are smokers can be disregarded as the companies that we would quote do not currently take this into consideration.
Both Caroline and Ben are below the age of 30, when PMI premiums are competitive. Once above the age of 40 the premiums can rise quite considerably. Therefore I would recommend that a 'fixed age at entry' policy is considered to take advantage of their current age. There are three providers that currently offer this. Exeter Friendly Society, where the premiums would be £62.36 and £62.94 for the preferred cover, which is over budget. The Exeter Low cost scheme would cost £39.31 and £39.82 respectively, total £79.13, but they would have very limited outpatient cover.
Norwich Union Medios offer the Executive policy which would cost £81.10 with a policy excess of £378.74. As Ben and Caroline show that they can save then this excess, payable only once per year if they do claim, should be manageable. In addition the excess will reduce by one-third for each claim-free year.
The policy is considered fully comprehensive and allows cover for osteopathy and chiropractic cover without GP referral, and without counting as a claim against the excess. Children can be added without any underwriting, and this would take them into a lower price bracket, further saving on their premium.
Nye Jones, AXA PPP healthcare
It seems clear that when it comes to buying medical insurance, cost is an important issue for Ben and Caroline. As we offer premiums that take in to account people's health and lifestyle, they could benefit from lower premiums if they gave up smoking.
With this in mind, they might want to opt for a plan that covers the essentials. With our Assure policy, they would have full cover for hospital admissions and surgical procedures as well as for outpatient cancer treatment and MRI/CT/PET scans. This would cost a total of £49.61 a month, if they lived in Colchester for example.
We would want to discuss with them their attitude to sharing risk as we offer a number of opportunities for customers to lower their premiums by doing this – for example, excesses, no claims discount and 'six week' NHS waiting list plans.
For instance, they could save over 25% by opting for our Assure 'six week' option, which pays for private care if the NHS cannot treat them within six weeks – and save a further 15% by taking out an annual excess of £100.
Further treatment of Ben's shoulder would probably be excluded unless we believed it had fully healed and been stable for some time.
Children could join the policy as and when they come along and, Ben and Caroline might also be pleased to learn that, to keep our policies affordable for the longer term, we apply age-related increases annually as opposed to at five or 10 yearly intervals.
Tessa Webster, Legal & General Healthcare
As Ben has an ongoing injury with his shoulder it would be better for him to have a fully underwritten policy. This will allow us to establish at outset the extent of the problem and identify and specify if any 'pre-existing' conditions will not be covered under the policy. L&G Healthcare's policies do not penalise smokers, so this will not affect the amount they pay.
The couple then needs to consider the level of excess they are prepared to accept. In this example, lower premiums could be achieved by a higher excess, and their savings could in turn fund this. Being young, their premiums would be relatively low, and an excess of £250 would reduce their premiums by a further 20%. The £250 excess would not deplete their savings too much, which is an important factor if they are planning to have a baby.
With the expanding family in mind, all L&G's healthcare policies have the flexibility to add a newborn baby at any time. If the newborn were added within three months of their birth, we would cover any conditions in existence at the time that they were enrolled onto the policy.
Taking into consideration all these factors, we would recommend our Essentials Plus Plan with a £250 excess, which will cover both treatment and diagnostic cover. Diagnostic cover can be especially reassuring for parents as they can quickly establish what is wrong with their children.
The policy would cost £64.06 per month for the couple, rising to around £84 when they have children, which is well within the £50 each budget they have set.
