Chris is 55-years old and wants to buy an individual private medical insurance plan for himself and his family. He lives with his wife, Karin, 37, and their eight-month old son, Benjamin. They are all in good health and lead an active lifestyle. Chris also wants to cover his 19-year old daughter, Rebecca, from a previous marriage. Rebecca is a full-time student and has suffered from epilepsy since early childhood. Despite this, she is in good health and regularly takes her medication. What are their options?
Stephen Walker, Medical Insurance Services
Although the individual private medical insurance (PMI) market has been stagnant for some time, the industry is beginning to wake up to the market's potential.
Consequently, there has been a flurry of new products based on a variety of different concepts, and there are more in the pipeline. Under Financial Services Authority (FSA) regulation, advisers are required to determine what Chris and his family are looking for from a PMI policy and what they want it to provide for them. In other words - what are their demands and needs?
The market can currently offer Chris and his family conventional budget and comprehensive policies, six week policies, lifestyle policies, age-capped policies, hospital treatment plans, plus an increasing number of modular plans that are menu-based with core benefits that can be upgraded (or in some cases downgraded) in order to suit their requirements and their budget.
Having done the ground work, Chris and his family can be offered budget cover for around £75 per month, comprehensive cover in the region of £200, Lifestyle £180, age-capped £90 to £210 or a hospital treatment plan starting at £95. Most of these premiums could be reduced by taking an excess, but for a family of four that may not be the best solution. A shared responsibility option may also be an alternative. Premiums could also be trimmed by providing the family with two separate policies, due to the age differential between Chris and his wife Karin. Rebecca would have an exclusion on treatment for her epilepsy, but she is probably well catered for by the NHS on that front.
Tessa Webster, Legal & General Healthcare
Legal & General will provide cover for Chris and his family but will exclude cover for Rebecca's epilepsy as a pre-existing condition.
On the basis that Chris will be happy to pay for initial consultations and other outpatient costs, such as X-rays and scans, Lifetime Essentials would suit his needs. This would cover the more expensive inpatient and day care treatment, together with any resulting follow up outpatient treatment.
Lifetime Essentials provides full cover for all eligible hospital charges arising from authorised inpatient and day care treatment for the whole family. It also provides full cover for outpatient treatment for a period of three months, following an eligible inpatient or day care stay.
With this policy, if Benjamin was ever taken into hospital, Legal & General would provide overnight accommodation for either Chris or Karin, at the hospital, so that they could stay with their son. The policy also includes a free medical advice line.
As there is an age gap of 18 years between Chris and Karin, it is more cost effective to take out two policies, one for Chris and one for Karin and the children. The cost to cover Chris would start from £49.95 per month and Karin's policy, including Benjamin and Rebecca, would be £42.21 per month. Both premiums could be reduced by up to 45% by choosing an excess of between £100 and £1,000 per year.
Charlie MacEwan, WPA
Medical insurance plans have become so flexible in recent years that Chris could combine a number of WPA products such as Professional Health, XS Health and minicash plan, to look after his family's needs and get great value for money.
Sadly, treatment for Rebecca's epilepsy would have to be excluded. In order to create some annual premiums I have assumed that the family lives in Edinburgh and that he is a professional, such as an IFA.
Professional Health is a modular product that customers can tailor to their individual needs. It includes shared responsibility, where individuals pay a proportion of their claims up to an annual maximum. Essential cover, with £1,000 shared responsibility for the family would cost £457.46; while Essential, outpatient and therapy cover with a £1,000 shared responsibility would cost £927.03. This could be combined with a mini cash plan, costing Chris £105, and Karin £84, to help with routine medical costs.
As Rebecca is over 18 and therefore unable to benefit from the family element of shared responsibility, I would recommend that she joins XS Health, which includes no limits on inpatient, day patient, outpatient and complementary therapies. With a £1,500 rolling excess, this will cost £59.99.
Chris should consider putting the savings that he makes, by opting for shared responsibility and XS Health, into a savings account to support the XS and shared responsibility requirements.
