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People pay hundreds of pounds each year to insure their cars and the contents of
their home but rarely give a thought to the bigger question of what happens to
them if they are unable to work due to illness, accident or disability. It is
often when people are in such position of desperate need that they consider
protection in these areas. However the opportunity to protect themselves against
these eventualities has been lost by then and, too late, they realise just how
wise investing in health and medical insurance can be. Critical Illness
Critical illness cover is no longer a new concept in insurance. The rapid
increase in the western world in conditions such as cancer, heart disease,
multiple sclerosis and stroke etc now makes critical illness a core component of
any serious financial protection planning.
The principle is straightforward; in the event of the insured being diagnosed
as suffering from one of the range of defined critical illness conditions, the
insurance company will pay out a tax free lump sum after a survival period
usually 14 or 28 days. Critical illness cover is very often combined with other
types of insurance such as life assurance so that, for example, a given sum can
also be paid out on the death of the insured. The policy may not cover conditions
that are known to exist when the policy is taken out. Underwriting is very
stringent and a person who is accepted for life cover may be declined for
critical illness cover.
Income Protection Insurance (IPP)
IPP also known as Permanent Health Insurance (PHI) provides cover in the
event that the insured is unable to work, and therefore to earn a living due to
long term illness, accident or disability. In a world where most of us depend
totally on our incomes in order to maintain our standard of living, IPP should
be a lynch-pin of every financial planning strategy.
The plan is usually set up until the insured’s expected retirement date to
ensure that financial hardship does not occur along the way and premium cost
tends to depend on the occupation of the policyholder, their age, smoking
habits, gender and the period of time that elapses between when the insured
becomes ill and when income payments begin to be made normally 4, 8, 13, 26 or
52 weeks.
There can be important variations between the cover offered by different
insurers and some policies can offer investment returns. It is therefore vital
to choose a balance between the cover you need versus the cost of premium. A
financial adviser with knowledge of the permanent health market can help you
select the appropriate policy for you.
Long Term Care (LTC)
We tend not to think about how to pay for long-term care until one of our
relatives has to go into a residential or nursing home. Average weekly nursing
home costs can run into hundreds of pounds. By paying either a regular or single
premium, you can add to the amount that may be available through state benefits
to fund the cost of such care and in the process preserve and safeguard more of
your assets and estate that you can pass onto your beneficiaries.
You should consider as an integral part of your discussion with Adviser, the
role that LTC can play in your financial planning as there is no doubt that the
need for care is likely to increase as life expectancy in the country continues
to rise and, with only limited care facilities available, the costs are also
likely to rise.
Private Medical Insurance (PMI)
With National Health Service (NHS) hospital queues still growing, private
medical insurance is an appealing though often expensive option. There is now an
extensive range of insurance companies that offer quality private medical
insurance as a genuine alternative to reliance on the NHS. The plans available
are pretty much "what is written on the tin". Therefore you get what you pay for
and premiums are worked out on the basis of age and the type of cover required.
There are different types of policies ranging from budget, standard to
premium.
At the basic level PMI covers you when you need specialist treatment or you
need to go into hospital. Some policies cover you if the NHS cannot provide
treatment within a certain period of time. This is an option now pretty much
engrained in Government policy in order to reduce NHS queues.
At the luxury end of the market, there are policies that cover a wide range
of medical services such as dentistry, eye care and even spectacles. However
the more a policy covers the higher the premium is likely to be.
PMI is complicated for those approaching it for the first time. In order to
make sure the policy you choose is the right one to meet your needs it is worth
speaking to an adviser who has specialist knowledge in medical policies and can
guide you through the range of options available on the market as well as the
exclusions and terminologies used to describe them. This is where we can help.
Legal disclaimer
These pages provide generic information about
various aspects of financial services advice that we provide as well as possible
areas of clients’ financial planning needs. We hope they are helpful to you but
they do not, on their own, add up to proper investment advice and we cannot take
responsibility for anything you do in reliance on them without further
discussion with us. Please do not make a decision based upon the information
contained within these pages alone. They are not detailed or comprehensive
enough to enable you to make an informed decision which is tailored to your
circumstances and needs. Please contact us now for tailored advice. |
