James, 27, is a personal trainer for a gym and earns £26,000. He likes adventure sports such as skyd...
James, 27, is a personal trainer for a gym and earns £26,000. He likes adventure sports such as skydiving and bungee jumping and wants to ensure he is financially protected should he suffer an accident. He has no dependants but rents a flat on the outskirts of London and pays £600 a month. James has group private medical insurance (PMI) through his company but does not know what else is available. He is healthy and has never smoked but his father had prostate cancer eight years ago. He can afford to pay £100 a month. What would you recommended for James?
Julie Smith, AWD Chase De Vere
First and foremost James needs to check with his employer what other benefits are available to him.
James' main priority is to protect his income stream in the event he is unable to work due to accident or sickness. An income protection (IP) policy would suit his budget and offer the necessary protection, paying a percentage of salary until he was able to return to work.
Presuming James is employed and does not work on a self-employed basis, he needs to check his company's sick pay policy to establish how much he would be paid and for how long if he is off work. An IP policy with a suitable deferment period can then be put in place. It is worth pointing out that due to his occupation, deferment periods may be restricted.
James is unlikely to obtain cover on an own occupation basis because of his job and is probably looking at cover on an activities of daily living basis, meaning any payouts are based on ability to perform certain basic tasks of everyday life.
No premium loadings will apply as far as family medical history but dangerous sports may cause a problem as most providers will only offer cover on an exclusion basis, meaning any accidents or injuries incurred as a result of dangerous sport will not be covered under the policy. That said, accident cover may be available through any club membership James may have which could act as a worthy rider benefit, although it may be costly.
Nick Homer, Norwich Union Healthcare
While James is young and healthy the extreme physical nature of his occupation and hobbies limit his cover options. The most comprehensive way to financially protect himself against serious accident or illness is to take out IP. This would provide James with a monthly benefit, potentially throughout the policy term, for as long as he satisfies the definition of incapacity and continues to suffer a financial loss. Due to the nature of James' occupation he is unlikely to gain cover based on own occupation, however he could obtain cover based on the more restrictive criteria of activities of daily work. In addition to this harsher definition of incapacity, the maximum termination age allowed would be 55 and it is likely that James' extreme hobbies would be excluded from cover. The good news is that James' family history of cancer will not affect his cover. It is important to consider the benefit start date when buying IP. If James has savings to support him for a short period, then opting for a slightly longer deferred period may reduce the cost. If he took the maximum benefit of £1,300 a month with a four week deferred period and a termination age of 55 it would cost £49.14 a month, but if he took £700 benefit after four weeks and a further £600 after 13 weeks of incapacity then the cost would be £37.93 a month.
Critical illness cover is not really an option for James because although his family history does not present a problem his personal circumstances mean that he could not obtain total and permanent disability cover.
Rod McKie, Aegon
One of the key considerations for James is to ensure he is financially protected should he suffer an accident or illness.
One of his first steps should be to find out if his employer has any IP in place and if they do, would it provide adequate cover on suitable terms. For this, Aegon would look to provide IP to cover his current salary - the maximum he would be offered would be 55% of his total earnings which works out as £14,300 assuming he does not receive a bonus. Given his occupation, James would only be able to get IP on an activities of daily work basis and the minimum deferment period he would be able to select is 13 weeks.
His involvement in adventure sports such as skydiving and bungee jumping means Aegon would incorporate an exclusion for all hazardous pursuits, meaning if he did have an accident while partaking in any such activity, his policy would not pay out. As long as his alcohol intake is less than 21 units a week and assuming he does opt for a 13 week deferment period and a 33 year term, then his premium would be £32.04.
The family history of prostate cancer would not impact this premium. Given that James does not have a mortgage and providing he does not have any dependants then this may be all the personal protection he needs.
