There are several basic categories of personal health and protection insurance plans. Each product is potentially an important element in your life long personal financial planning strategy, but who needs which product?
Here we will look briefly at which types of insurance product you might need.
Life cover – level term (a set amount of life cover over a specific term) and mortgage protection (cover that reduces over time as your mortgage capital amount reduces)
Many people will have life cover that is attached to their mortgage to pay it off in the event of their or their partner’s death. Additional life cover though can be vital as a person moves through different life stages: – buying their first or a larger house, marriage (or divorce), having children, promotions at work and so forth. Each different life event gives rise to an ever changing need for life cover.
Remember that as a general principle life cover is cheaper the earlier you buy it and of course you need it in place before problematic health conditions develop. It is important as well to take into account additional factors like any cover made available via a death in service plan at work or paying off part or all of your mortgage.
Life cover is a ‘simple’ product but implementation can be extraordinarily complicated.
Income protection – provides replacement income when ill health prevents you from working
For the higher earner, self employed people, company directors and tradesmen – in fact anyone whose income isn’t guaranteed and for whom illness could mean the end of their income or business. Income protection is a tightly underwritten plan but implemented properly is an essential consideration.
Critical illness (CI) – pays a cash sum if you are diagnosed with one of a range of conditions. Available as stand alone cover or linked to life or mortgage plan
Recent headlines have undermined public confidence in critical illness but a plan that pays a cash lump sum following the diagnosis of a serious illness has obvious attractions. Many of us will have come across CI as a ‘bolt on’ to a mortgage policy. This cover suits people who view the risk of being diagnosed with serious illness as potentially having more of an impact on their lifestyle than them dying. So this product will appeal to some but not others. Given the increased survivability of many previously terminal conditions (with cancer being the most obvious) CI may be worth considering – surviving a serious diagnosis may be the first step to a recovery and increased financial stability moving forwards might be useful.
Private Medical Insurance (PMI) – immediate access to high spec private medical treatment.
With long waiting lists for a range of acute medical conditions within the NHS the requirement for PMI is two fold – anyone wanting immediate access to highly focused treatment might opt to purchase this cover. Secondly, in a work context many people cannot afford to sit on a waiting list for an out-patient consultation,test or in-patient procedure. For some PMI is a convenient lifestyle choice but anyone who needs to be physically and mentally active to earn their income needs PMI as much as they do income protection.
International PMI – the overseas equivalent of PMI for UK expats living and working abroad.
Occasionally PMI in the UK can be viewed as a ‘luxury’ purchase but when living or working abroad, without the safety net of the NHS, obtaining treatment in a foreign country can be a daunting experience. Knowing your private medical cover is available ‘24/7/ 365’ provided by an English speaking company that understands your personal needs, makes ‘iPMI’ an essential buy.
A more complex and technical product where our expert advice is invaluable.
Cash Plans – a traditional medical insurance cover, refreshed for the 21st Century that pay discrete cash benefits based on a range of medical situations.
Many people pay a few pounds into their local ‘Hospital Saturday Fund’ or cash plan. A low cost medical insurance product that offers a bewildering array of smaller cash benefits for things like routine dentistry, eye tests, out-patient consults and so forth. The lower entry costs of this product (from a few pounds a week) mean that this plan suits people who perhaps want to ‘dip a toe’ into the medical insurance world. Often people with cash plans will make good use of them (as you can often claim regularly, even sometimes more than you pay in) and then move on to full PMI plans later.
Traditionally companies have offered a cash plans to their employees as a low cost alternative to full medical insurance cover. So you may also have come across this product and been offered it via your work either paid for in full by the company or at a lower subsidized rate.
The above details are of course a whistle stop tour of what are (or can be) pretty complex insurance products and the information present should not be considered exhaustive.
For a full evaluation of your personal requirements please contact your local Premier Choice Healthcare consultant.