Financial protection

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A lump sum on:

* Death

* Permanent disablement

* Loss of an eye§ Loss of a leg, foot or toe

* Loss of an arm, hand, finger or thumb

* Other specified injuries or accidents

A refund of the cost of medical expenses up to a specified percentage of the costs incurred when the insured ha...

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Premiums paid to PAS plans are subject to IPT

There is no tax relief on premiums paid

Benefits are paid tax-free

Where an employer pays premiums, these are taxable on the employee as a benefit in kind but are a deductible business expense for the employer

Employer provided policies may be linked to salary rather than a fixed sum

What is the maximum length of time that a weekly sickness benefit would be paid for under a personal accident and sickness plan?

Answer : Purchase course for answer

The NHS provides valuable medical services; however, for conditions that are acute but not life-threatening, treatment may not be delivered in a timely manner due to waiting lists and the distribution of resources. Individuals may wish to have some flexibility in terms of how, when and where treatment is delivered and this is not usually possible through the NHS. Flexibility may be required where:

The individual wishes to fit treatment around working or family commitments

They require treatment at the earliest opportunity to reduce any time off work

In November 2017, the ABI published its latest Statement of Best Practice for Sales of Individual and Group Private Medical Insurance. The rules are mandatory for all ABI members and generally also adopted by others. The Statement is based around four principles:

ABI common definitions must be used in all policy documents where those words apply

Each customer must get all information mandated in the statement

Explanations must be given of core terms and conditions appropriate to the customer’s circumstances in plain and intelligible language and show:

- what treatment is and is not covered

- features and benefits

- the potential for premium changes at renewal

- details of how to claim

- explanations of the underwriting process and how excesses can apply to claims

Customers must get specific information, generally at the point of sale. This includes the ABI consumer guide ‘Are You Buying Private Medical Insurance?’ and information provided under the following prescribed headings:

- Your underwriting options

- Your PMI cover for long-term/chronic conditions

- Cover for cancer (must be in a distinct section)

- An explanation of the cover for drug treatment

Cancer can start as an acute condition but - if treatment is unsuccessful - become chronic. Due to the high cost of claims, some insurers now limit the amount they will pay for cancer or exclude it completely. Most policies will also not pay for experimental treatments or drugs nor licensed in Europe or by the Government’s National Institute of Health and Care Excellence (NICE).

Benefits a...

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Moratorium underwriting defers full medical underwriting until a claim occurs. At the point of a claim the insured may find that little or no cover - or substantially less than anticipated - is provided

Where full medical underwriting is selected the insurer will ask questions about medical history and may seek additional medical evidence. The results of the medical underwriting may result in additional exclusions; however the insured will know the full extent of cover provided

Claims

Claims usually start following a referral from a GP, or emergency admission to a hospital

The insured should make early contact with the insurer to discuss the requirements and obtain sign-off on treatment

The insured must provide the required amount of medical evidence throughout the claim

Payment is usually made directly to the doctor or hospital

As all PMI plans are annually renewable, claims may result in an increase in premiums or the application may be declined at renewal

PMI sales and marketing

There is a wide range of choice available in the PMI market and with increasing costs and the short-term nature of PMI insurance, it is tempting to review the market place to look for a better deal.

Where changes are to be made it is vitally important to take the following into account:

A new policy is likely to exclude all pre-existing conditions, even where treatment would have been provided under the previous policy

Existing conditions may be subject to a moratorium

Although there may be a saving on the premium, the cover is likely to be reduced

There is also a trend for new policies to make premium rates look attractive by offering larger excesses where the insured pays the first £1,000 to £5,000 of a claim.

Unless specifically sold as international PMI policies, care should be taken as they are unlikely to provide cover for treatment outside of the UK. Short trips abroad will normally be covered under travel insurance and for travel within the EEA states cover can be partially provided through the Global Health Insurance Card (GHIC). However, the GHIC provides care for treatment at the same level as for home nationals and not necessarily at UK NHS levels.

What types of benefits are offered by a hospital cash plan?

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Benefits are usually payable for between 12 and 24 months

The maximum benefit will vary between different insurers. Typically this will be based on a percentage of the mortgage and related costs, up to a maximum of 125%, and restricted to an overall limit as a percentage of gross income or a specified amount, for example up to between 50% and 65% of income capped at, for example, £1,500 per month

Related costs can include associated insurance policies

Polices are normally taken out in connection with a new mortgage but can be added to an existing mortgage

The cover is not tied to a specif...

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Payment protection insurance (PPI)

This is a similar type of insurance that can be taken out to cover specific loans or other credit agreements and the basic terms and conditions are the same as for MPPI.

Since the start of the 2012 tax year, following a review by the Competition Commission as a result of customer complaints, PPI cannot be sold at the same time as a loan agreement is signed. It must be offered separately and the lender must wait seven days before doing so.

Many PPI policies were mis-sold, and since 2011 banks have been dealing with complaints from customers, at a cost of billions of pounds in compensation. The FCA final deadline for making new claims was 29 August 2019.

What is the maximum benefit paid by a mortgage payment protection insurance plan?

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Typical features of an ASU plan are:

A monthly or weekly benefit payable if the insured is unable to work due to accid...

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Premiums paid to ASU plans are subject to IPT

There is no tax relief on premiums paid

Benefits are paid tax-free

What is the maximum period for which a claim for accident, sickness and unemployment (ASU) can be paid?

Answer : Purchase course for answer

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Quick and easy to apply for

Lower costs

Policies are annual

Shorter benefit payment periods

Can be terminated by the insurer

Can have premium increases

This revision test (opens in a new...

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