Income protection (IP) and Private Medical Insurance (PMI) are two important insurance protection products. However, many clients (and indeed insurance advisers) will only consider one of these products at any one time. This is probably due to the prospective costs of buying two plans instead of one but also ignores how well these two subtly different products can work together and compliment one another.
IP is a plan designed to provide a salary replacement when you are unable to work, usually following medium and long term illness. Within certain limits the plan will pay out a monthly cash sum with the commencement of payment usually being tied in to when your company sick pay ends – called a ‘deferred period’. In other words, if your company sick pay ends after three months of illness then you would set your IP deferred period to 13 weeks. Crudely, the longer the deferred period the cheaper the IP contract (as it is less likely to need to pay out). So this deferred period is a vital policy element when setting up your cover.
PMI conversely, is a product designed to pay out immediately when you first get symptoms of any illness requiring medical treatment (subject to the insurers policy terms and conditions). The PMI policy holder, rather than being subject to the vagaries of the National Health Service receives immediate access to private medical treatment, when needed and has the choice of treatment provider and private facilities. Choice, convenience and immediacy are at the core of private medical insurance.
Considering the above it is possible to begin to formulate the vital connection between the two products under discussion. Set up properly, the two plans interlink and work together. Should you become ill or have an accident the PMI plan begins work immediately on diagnosis with referral to the private sector straight from your GP. There is no waiting list and a quick diagnosis, consultation and treatment cycle mean that the claimant has the best chance to be able to return to work quickly. Reducing the likely need to use the Income Protection product at all. However, should the illness prove longer lasting, more serious or you suffer a late set back then the income protection will kick in following the set deferred period ensuring that as the PMI provides the best medical treatment available, the IP pays out concurrently so you have no financial worries to exacerbate the situation.
Both plans therefore support and protect during any illness or injury from both a treatment, financial and lifestyle planning perspective.
So who should have these products?
In effect anyone who values the ability to work, look after their family and is keen to protect against the possible (and some would say likely) chance of illness. For senior managers, the self employed, tradesmen, directors – they cannot afford to lose their income or be unable to work longer term making these essential products providing two essential sides of the same health protection coin.
Our specialist health and protection advisors at PCH can help you plan for the protection of your health.