The right health insurance policies for you
THE RIGHT HEALTH INSURANCE POLICIES FOR YOU Choosing the right health insurance policy is not just about buying cover at the cheapest price. Getting peace of mind that you have the right cover should you suffer a health problem is just as important perhaps even more so. The main types of health insurance needs involve covering: The cost of private medical care. This can be met through private medical insurance. Everyday health costs such as dentistry, optical care and hospitalisation. Health cash plans meet these needs. The financial costs associated with being diagnosed with a very serious, or critical, illness or condition. Critical illness insurance covers this need. Being unable to work long term because of illness or disability. Income protection provides this type of cover. Being unable to work for a few weeks or months because of illness, disability or unemployment. Accident, sickness and unemployment also called PPI can meet this need. The cost of long term care, for you or a relative. A range of solutions may help here. Private medical insurance Private medical insurance (PMI) pays for you to have private hospital treatment. You can choose what type of treatment you want covered just in-patient or day-patient treatment, or out-patient consultations and tests as well. It is possible to tailor cover to meet both your needs and your budget. For example, some policies offer a choice of hospital scales, as treatment costs can vary widely, with central London hospitals usually the most expensive. PMI only pays for treatment of acute conditions (broadly, conditions that come on suddenly and can be cured and should not then recur). It does not cover chronic conditions such as asthma or diabetes. Before being accepted for cover, you may have to answer a number of questions, and pre-existing conditions may be excluded. We can advise you of what these choices mean in practice. Health cash plans Health cash plans pay for everyday health costs. Typically, a plan pays 75-100% of costs for dentistry, optical and consultation costs, plus a small sum for each day spent in hospital. Each is subject to an annual limit. You can also cover dental costs in other ways. Capitation and maintenance plans are agreed with your dentist and cover likely dental costs over the next year. Dental insurance is also available. Both health cash plans and dental insurance may be subject to an initial waiting period before particular benefits are covered to stop people taking out a policy just to get treatment, then cancelling it. All Rights Reserved Page 1 of 3
Critical illness insurance Critical illness insurance is like life insurance, but instead of paying out on death (although some policies do that, too) it pays a cash lump sum on diagnosis of a critical illness. Over 30 conditions may be covered, but the major ones are the most serious cancers, heart attack and stroke. It does not matter if you can continue working this policy pays on diagnosis, not on the financial consequences of the condition. Critical illness insurance is often taken out to cover a mortgage and, because you are more likely to have a critical illness than die in any year, is more expensive per 1 of cover than life insurance. Income protection Income protection sometimes called permanent health insurance or PHI pays a weekly or monthly income if you are unable to work because of illness or disability. Usually you can insure up to around half your income. The policy pays out after a waiting period on each claim, and can pay right up to retirement age. Income protection pays out on a much wider range of conditions than critical illness insurance, but only if the condition stops you working. If you do not carry out paid work, you can also get income protection, but on a more limited basis. Accident, sickness and unemployment insurance Accident, sickness and unemployment (ASU) insurance is known as PPI (payment protection insurance) if used to cover credit or a loan, or MPPI (mortgage payment protection insurance) if it covers your mortgage. This policy pays a monthly income for up to one or two years only if you cannot work because of illness, disability or unemployment. Some policies pay off any loan if you die. Policies usually last for the term of the loan or up to retirement age. ASU is not a complete alternative to income protection, as payments are only paid for short term problems. However, it can be combined to provide more comprehensive cover. You can buy PPI and MPPI direct from lenders, but it can be substantially more expensive without offering any better cover. Long term care Long term care can cost up to 26,000 a year (more in some cases). By age 80, there is about a 1 in 5 chance of needing such care. Planning for care fees can be complex you could qualify for some state and local authority help, but the latter is means tested based on how much capital and income you have and that can include the value of your home. It is possible to buy insurance in advance of needing care, although your options are currently very limited. Alternatively, you can wait and see if care becomes needed. If it does, a range of solutions is possible it may be possible to rearrange investments, take out an arrangement linked to the value of your home (called a lifetime mortgage or home reversion scheme) or buy a special insurance designed to pay for care for as long as you need it. Each situation is different, so there is no simple solution to meet all needs. All Rights Reserved Page 2 of 3
How we can help Insurers are constantly looking at new ways to meet people s healthcare needs. So you can now buy life insurance that includes critical illness and/or income protection insurance. Buying in this way can be cheaper but only if each element gives you what you want and need, and at the right price. It is not always obvious whether something that looks new actually is, or whether it is better than what went before. That is where we can help. By analysing new solutions, we can help you to select the right policy or policies to meet your needs in the most economical way. One issue is that it often makes sense to prioritise health insurance needs. Buying the very best and most comprehensive policies may simply cost too much. This is where it is important to look at the available options what do you need or want to have most now? How much cover do you need? Can you defer some types of cover until a future date? As financial advisers, we can help you to prioritise, so that you get the cover you want at the price you can afford. This guide is for general information only and is not intended to be advice to any speciare recommended to seek competent professional advice before taking or refraining from taking action on the advice, so it is outside the investment prote at 4 All Rights Reserved Page 3 of 3
Thank you for your interest in this Essential Guide. For further information or if you would like to discuss any aspect of the guide, please contact us. EA Financial Solutions Ltd 869 High Road Finchley London N12 8QA +44(0) 208 4463231 Email: info@eafsolutions.co.uk All Rights Reserved