My client is just starting out in freelance consultancy after being made redundant. He is a single parent with a 14-year-old daughter and previously had all major protections and private medical insurance (PMI) through work. I will cover him for the usual needs, but are there any wrinkles I should be aware of?
Linda Wallace, Bupa Health and Wellbeing
As a single parent starting a new venture, the client will value a policy from a provider that offers value for money and long-term security.
When moving between insurance policies, one of the most important things to consider will be medical underwriting.
If the client or his daughter has made a claim on their previous policy, then it is sensible to check whether their current PMI provider offers the option to move from their group policy to an individual policy without being medically re-underwritten.
Members of group schemes provided by Bupa, for instance, can move to the BupaCare individual policy and continue their underwriting, providing they had been on their corporate policy for a continuous two-year period or were fully underwritten when they first joined.
There are no financial limits on inpatient treatment with this policy, so the client can be certain that he and his daughter will be covered for any eligible treatments they need.
In a scenario where the client hasn't made a claim, it might pay to shop around for a policy that suits their particular needs.
In this case, the client should consider the terms on which he can add his daughter to the policy.
If the client does want to move but has made a claim, he can look for a moratorium option with a new provider.
If he chooses this option with Bupa, and has not had any symptoms or treatment for the same condition in the first two years of the new policy, he will then be eligible for treatment under the policy.
Andrew Ward, Your Sure
Assuming the client is protected for life, critical illness, income protection and PMI, there are several add-ons or tweaks that can be made to the client's protection to tailor it to his specific situation.
Relevant life cover is one option. If he has started a limited company, then he could make significant savings on his life insurance by arranging a relevant life policy.
This will be an allowable business expense and not treated as a benefit in kind, so this could save him a significant amount of money. This policy can be put into trust to his daughter, too.
A second consideration is optional critical illness cover for children. The usual standard free benefit for children's critical illness is up to £25,000. But for less than £8 per month, this can be enhanced to £125,000.
Being freelance and therefore dependent on working to make money makes this a valuable benefit if he needs to take time off to look after his daughter.
At Your Sure, we have had a full claim on this exact benefit, so we know how essential this can be.
Thirdly, education cover or a family income benefit could ensure his daughter is provided for year-on-year during dependency.
If his daughter has aspirations to higher education, then a policy that pays education costs in the event of the father's death should be more cost-effective than a family income benefit policy. This provides some certainty in ever-changing education costs.
David Hollingworth, London & Country
Redundancy is one of those life-changing events that demands a reassessment of so many things, not least the protection need when the shelter of employer benefits has disappeared.
A crucial element here will be assessing the budget available for protection as this will be key in establishing exactly what type and level of cover might be possible.
Having only just started as a freelance consultant, there could be constraints on budget until everything gets on an even keel and earning potential becomes clearer.
You mention that you will cover him for the usual needs and clearly, being a single parent will weigh heavily on his mind.
That will necessitate insuring the life in trust with the possible addition of family income benefit.
However, income protection must be made a priority here and should take precedence over any conversation around critical illness cover.
Because of the change in employment status it could prove problematic to provide much in the way of proof of income, especially if there was a need for an early claim.
It is therefore important to take into account providers' minimum guaranteed amount to ensure that there will at least be some benefit if income is lower than expected.
The deferred period may well need to be kept short due to the self-employed status. It could even be worth considering a short-term policy if price is proving a constraint.
In any event, it will make a lot of sense for your client to review his needs once he is up and running and his income level firms up.
