My clients are a newly married couple aged 33 and 29. They both value their personal private medical insurance (PMI) plans but are concerned that rising premiums mean they may have to surrender them. What options are available that could persuade them to retain their cover or cater to a smaller budget?
Brian Walters, Regency Health
There are a number of ways to reduce the cost of private medical insurance, but the starting point should always be a whole-of-market review on a like-for-like basis. Many PMI policyholders are insured on legacy plans that are no longer competitive, such that a comparable level of cover can very often be achieved for a significant premium saving.
Of course, much depends on the client's medical circumstances —an adverse medical history may preclude a move to a new insurer.
If it does prove necessary to introduce some cost-control measures, there are three main options: sacrifice some or all of the out-patient benefit, increase the excess, or opt for a six-week-delay clause (where available).
Budget PMI plans are characterised by very limited out-patient cover. Expensive out-patient scans and radio/chemotherapy usually remain covered in full, but consultations, therapies and other diagnostic tests will need to be self-financed or sought on the NHS.
High excesses are often associated with significantly reduced premiums, but a single in-patient claim can, in some cases, negate years worth of premium savings. A high-excess strategy is best pursued in tandem with a budget plan.
A few insurers still offer a six-week option, where the member agrees to have treatment on the NHS if it can be provided within six weeks. If the waiting list is longer than six weeks, private treatment is covered immediately. These plans have become less popular as NHS waiting times have improved and are not generally favoured by advisers.
When downgrading their cover, clients should always be advised that upgrading again will invariably be subject to re-underwriting.
Debbie Kleiner-Gaines & Lizz McDonald, Best Health UK
The clients are still very young and we don't know what the future holds in terms of possible promotion leading to PMI as a company benefit.
Initially, my thoughts were to look at a five-year fixed premium from National Friendly, however, this plan would be more expensive initially and offers less cover than alternatives, so I would not recommend it at this point.
Aviva offers a flexible policy with £500 out-patient nil excess and protected no claims discount, and if they follow its My Health Counts incentive, they could benefit from a 15% discount which may result in a reduction in their premium next year.
My Health Counts involves completing a health questionnaire online which allows the customer to find out how healthy they are, how healthy they can be and depending on their score, will determine how much discount they will get next year.
Another way of reducing premiums with this policy would be to choose the trust care hospitals, which means using private patient units of NHS hospitals. To reduce the cost further they could add a six-week option to this policy, meaning that they will have immediate access to diagnosis and investigations. They will also have access to in-patient and day-patient procedures immediately when the NHS waiting list is longer than six weeks. All this would reduce the cost to around £42.
Many policies including Aviva's Healthier Solutions product offer flexible modular plans which can accommodate the client's budget in most cases.
Charlie MacEwan, WPA
Within a difficult economic climate, these are challenging times. The most important thing is to further understand the couple's requirements so that the choices on offer satisfy those needs.
Based on the available facts, their options include:
Taking out a co-payment (shared responsibility) plan that can reduce premiums by up to 70%;
Considering a substantial excess to dramatically reduce premiums by up to 90%; or moving to an NHS Top-Up cash plan rather than ‘go private no matter what'.
WPA's new range of personal PMI plans offer many options and a large discount for the self-employed or members of the professions. As people get older their needs change, and so these plans can be tailored accordingly.
For this professional couple, their combined premiums would be from £16.49 per month while cover would include: £50,000 for ‘fast track' elective surgery and £50,000 life-time cover for advanced cancer drugs not available in the NHS.
You may ask your clients why they need to pay for full cancer cover when it is predominantly an age-related disease. The good news with this option is that they will have cancer cover which effectively supplements the NHS.
Our XShealth policy offers comprehensive PMI cover with a £1,500 per person ‘rolling' excess - ideal if the couple want ‘true' insurance in case something more serious happens. Benefits include up to £150,000 per year in-patient, out-patient and cancer cover for a combined premium of £21.33 per month.
