Should more advisers be looking to sell healthcare cash plans? Is it an advice-driven product?
Market views
Jill Davies, Westfield Health Scheme
The time has come for intermediaries to remove the blinkers and take a good long look at healthcare cash plans. Forget the traditional battlelines between private medical insurance (PMI) and healthcare cash plans, the two can now work brilliantly side by side to keep costs down for client companies, while still providing wider health benefits.
They can bridge the vital gaps between PMI and the NHS by providing the added benefit of cover for everyday healthcare such as dental, optical, physiotherapy and chiropractic treatments.
Many intermediaries are finding that PMI claims costs, age band changes and insurers' administration costs have increased renewal premiums for the companies they advise, at a time when budgets are tightening. This is putting pressure on intermediaries to research the market for a cheaper alternative while maintaining the same benefits.
A way for companies to lower the premium and help control future claims costs is to agree to pay an excess on their PMI cover. The savings made can go towards funding a healthcare cash plan, which includes consultations and therapy treatments as well as dental and optical cover not normally included in a PMI scheme.
This is particularly important at a time when employers are facing the need to reduce the risk of employee litigation and meet tougher health and safety requirements. Intermediaries can add value by helping to provide benefits that assist in controlling future claims costs.
Cathy Gilbert, BUPA Cashplan
The number of healthcare cash plans sold through advisers is growing but is still a very small percentage of the total market. This is despite the fact that the number of people with healthcare cash plans in the UK is similar to the number of people covered by PMI – approximately seven million.
Healthcare cash plans offer the potential of an additional revenue stream from both new and existing clients as intermediaries receive both initial and renewal commission. It is an easy product to understand, there is no medical underwriting and registration is very quick.
Although the product is relatively simple to understand, clients often find it useful to discuss the varying benefits on offer with an expert. This is especially true as providers increase the number of product options that are available. The intermediary is the key to ensuring they understand their options and make a fully informed choice.
At the corporate level, schemes have often been in place for many years and are seldom reviewed. These schemes offer a great opportunity for an adviser to revisit the existing scheme with the client and review them to see how they could be improved. This is another opportunity for the intermediary to add value.
Providers who want to attract new business will offer support to intermediaries in the form of training workshops or promotional material. This is an untapped market, the product is easy to sell and commission levels, particularly on corporate deals, make it attractive.
Hazel Gregory, Medical Insurance Services
If an adviser doesn't already include healthcare cash plans in their portfolio, now is an ideal time to enter this growing market as it offers cost effective healthcare solutions for both individuals and employees.
Comprehensive PMI cover has become unaffordable for many consumers. Therefore, it makes good commercial sense for an adviser to be able to offer their clients' alternative healthcare solutions rather than see them drop from the healthcare market altogether. PMI and healthcare cash plans complement one another so a lower cost option may not necessarily be one or the other but a combination of the two such as a healthcare cash plan and a budget PMI policy.
While cash plans are not a substitute for PMI, they do provide cover for those everyday benefits such as dental, optical and physiotherapy treatment, which is very appealing at a time when it is difficult to find an NHS dentist.
Although healthcare cash plans do not attract any where near the level of commission that a PMI policy does – premiums are much lower in any event – it does provide a stream of income that would otherwise be lost. Historically, healthcare cash plans are not an advice-driven product. However, over the past couple of years we have seen new players enter this market and the introduction of innovative products, each with their own special features and aimed at different target markets. This has hugely influenced the need for independent advice on healthcare cash plans.
Raman Sankaran, HealthSure
There is no doubt that advisers are missing a key sales opportunity when it comes to healthcare cash plans. Currently, just 26% of UK employers offer healthcare cash plans as part of their employee benefits package, leaving huge market potential.
Our intermediary contacts are reporting increased demand from their corporate customers, primarily because healthcare cash plans cover a wide range of treatments including those that address the major causes of health-related employee absenteeism.
Healthcare cash plans can help address these problems removing the financial barriers to treatment and enabling employees to go directly for treatment providing quicker resolution to healthcare worries and less time off work. An added selling point is that, where PMI is often restricted to senior levels, healthcare cash plans can be offered to the entire workforce regardless of salary or status within the company.
