6: Other insurance‑based protection policies Flashcards
ASU - Accident, sickness and unemployment
Underwritten? Revieable/renewable?
- Provides and income and/or lump sum if the claimant cannot work due to accident, sickness, or redundancy
- Alternative to IPI but can work with
- Not underwritten on a personal basis
- Annually renewable at the discretion of the insurer
- Can increase premiums or withdraw cover in light of poor claims experience
*
*Deals with probabilities, not certainties.
IPI provides permanent cover, ASU can be revoked
ASU vs IPI - Reviewable, premiums, cover, benefit
Reviewable
* ASU: Annually reviewable
* IPI: Guaranteed premiums = not reviewable
* PIP: Non-guaranteed premiums = After 5 years, then each year thereafter
Premiums
* ASU: Can increase yearly
* IPI: Guaranteed premiums = Cannot increase unless changes made
* PIP: Non-guaranteed premiums = Can increase
Cover
* ASU: Can be withdrawn
* IPI: Cannot. Permanent
Benefit
* ASU: Combines Income and Lump-sum benefit. Income for** max 1-2 years.Lump-sum for certain conditions
* IPI: Provides an income until retirement or return to work**
ASU: Income Benefits
Deferal period, Maximum payment term
- Income benefits paid after deferral period - usually 1 month
- Payable for maximum period -** one or two years**
- Often the unemployment (redundancy) element is not offered
ASU: Lump-sum benefits
Provides lump sum benefits in the event of certain specified conditions arising:
* Death as the result of an accident
* Loss of a limb
* Loss of an eye
* Total and permanent disability
Lump-sum benefits are scaled on severity of condition
ASU: Exclusions and restrictions
- No payment for pre-existing condition
- Unemployment no covered for self-employed
- Redunancy payment only valid after a certain period and excluded if believed to be imminent
Group accident and sickness schemes - types offered by employers
3 ways that the schemes are offered
- Schemes that are entirely paid for by the employer,
- Schemes that are provided by the employer that employees can join entirely at their own expense
- Schemes that are subsidised by the employer, but require a contribution from employees.
Payment Protection Insurance (PPI) - Purpose, premiums, cover
How long can cover be provided? Deferral period?
- Designed to protect repayments to service a loan or debt
- Often arranged for a mortgage, personal loan, or overdraft
- Some policies may even repay the loan in full on death.
- Cover is normally provided at a fixed cost per £100 of benefit.
- deferred period (typically, from 30 to 60 days).
- Cover can be arranged for a period of 12 or 24 months
Bad press due to mis-selling and confusion with IPI
*Limited support from state for repayment of debts
Exclusions from PMI
- The proposer must have been actively and continuously employed for a specified period prior to the proposal.
- Any redundancy that the proposer had reason to believe was imminentwhen they took out the policy will be excluded.
- No benefit is payable if redundancy occurs within a specified period of the cover starting.
- Any period of unemployment or disability arising from self‑inflicted injury or abuse of alcohol or drugs will be excluded.
- No benefit is payable if disability is owing to a pre‑existing condition.
Comparison of ASU, IPI, CIC, PPI - Tax?
All are tax-free
Comparison of ASU, IPI, CIC, PPI - Benefits period?
ASU
* 1-2 years
IPI
* Recovery, retirement, or death
CIC
* 1 month (client has to survive 1 month to claim)
PPI
* 1-2 years
Comparison of ASU, IPI, CIC, PPI - Underwritten?
ASU- No
IPI - Yes
CIC - Yes
PPI - No
Comparison of ASU, IPI, CIC, PPI - Premiums
Reviewable, variable, level?
ASU- Reviewable
IPI - Level
CIC - Variable - depending on plan
PPI -Reviewable
Comparison of ASU, IPI, CIC, PPI - Benefit?
ASU
* Income (can provide lump sum in certain circumstances)
IPI
* Income
CIC
* Lump sum
PPI
* Income
Comparison of ASU, IPI, CIC, PPI - Deferred period?
ASU - Yes (Lump sums, No) (min 30 days)
IPI- Yes (min 4 weeks)
CIC - No
PPI - YES (min 30 days)
Private medical insurance - what is it? How are benefits received?
- PMI is designed to provide cover for the costs of medical expenses.
- Can be arranged by the individual or offered on a group basis via employer
- Group policies are a benefit-in-kind and tax deductable
Benefit depends on provider
* Can be a full refund on medical charges
* Others can pay directly to healthcare provider
* Some will pay up to a limit, with an excess charged to the policy holder
AXA Health, Bupa, Cigna and Vitality are among the main providers of PMI in the UK
Factors affecting premium reates for PMI
- Whether or not it is a comprehensive plan
- Location
- Type of hospital the individual is allowed to access
- Type of accomodation available to patient - access to only local or cheaper hospitals will reduce premium
- If there is limits
- Morbidity risk - increases with age
- No-claims bonuses also avaliable
- If a budget-scheme is offered - limit to choice of hospital or may require treatment at NHS if waiting list is not a certain length
What benefits are included in comprehensive PMI?
- No limits on overall claims;
- Accommodation costs covered for parents if a child is hospitalised;
- Psychiatric treatment;
- Lump‑sum payments if a critical illness is diagnosed;
- Overseas medical cover;
- Insurance of pre‑existing conditions, subject to an additional premium;
- Cover for spectacles or contact lenses; and
- Dental care (subject to limits).
General exclusions for PMI?
- Pre-existing conditions
- optical care;
- routine dental treatment;
- routine maternity care;
- chiropody;
- the treatment of ailments that are self‑inflicted (for example, the consequences of
drug and alcohol abuse); - cosmetic surgery; and
- alternative medicine
A fully comprehensive plan may cover some of these conditions
What is a Hospital cash scheme? Benefits?
Like PMI but designed to cover additional costs that may arise from hospitalisation, rather than refunding medical care costs
* Payment of a lump sum on reaching an advanced stage of pregnancy
* Cash benefit on a per‑night basis for every night spent in hospital (there is likely to
be a limit to the maximum number of nights for which claims can be made);
* Cash lump sum if a long stay in hospital is required in the event of a single course
of extensive treatment or a lengthy period of recuperation;
* Enhanced cash benefits if both spouses are hospitalised at the same time;
* Refund of 50 per cent of the cost of dental care (to a maximum upper limit);
* Refund of 50 per cent of the cost of optical care (to a maximum upper limit);
Dental insurance
- Growing need as NHS denists are in decline
- Not a standard feature of PMI
- Typically operates as a cash-bashed scheme designed to pay the costs of dental care subject to maximum benefits
