Type: Private medical insurance
Minimum-maximum ages: 18-64
Maximum benefit: Section one – £5,000, section two – £10,000, section three – £5,000, section four – £5,000, section five – £1,500
Cover provided: Section one – Angioplasty, cartilage operation, dental work, ears, eyes, nose, throat, duodenal, peptic or gastric ulcers, gall bladder, hernias, haemorrhoids removal, hip or knee replacement, hysterectomy, kidney stones, prolapsed womb, prostate, slipped disc(s), varicose veins. Section two – Aorta graft surgery, benign brain tumour, cancer, coma, coronary artery by-pass surgery, deafness, heart attack, heart valve replacement or repair, kidney failure, loss of limbs, major organ transplant, stroke, third degree burns. Section three – Alzheimer's disease, aorta graft surgery, benign brain tumour, blindness, cancer, coma, coronary artery by-pass surgery, deafness, heart attack, heart valve replacement or repair, kidney failure, loss of independent existence, loss of limbs, loss of speech, major organ transplant, motor neurone disease, multiple sclerosis, paralysis, paraplegia, Parkinson's disease, stroke, third degree bums- Section four – Accidental death- Section five – Hospital cash benefit £50 a day up to 30 days
Excess: Section one – £100, section two – £250
Charges: None Discount: None
Commission: Initial 25%
Tel: 01273 477784
John B Carr, principal John B Carr Financial Services, Victor Lewis-May, managing director, Lewis May and Associates, Guy Jones, managing director, Berwick Devoil Healthcare, Dale Tranter, research
manager (protection & pensions), Misys
Range of cover 4.3
Premium rates 5.5
Company's reputation 3-3
Product literature 6.3
HospitalCARE from Berkeley Alexander is a private medical insurance (PMI) plan that features elements of critical illness cover and healthcare cash plans.
Commenting on how the plan fits into the market Carr says: “Overall, the plan offers reasonably comprehensive medical cover at a reasonable cost. It combines the benefits of private health insurance, critical illness insurance, accidental death insurance and hospital cash benefit. It should fit in well in the current market.” Jones thinks the plan sits mid way between low-cost health insurance and cash plans. Lewis May thinks it is suitable to provide short-term cover.
However, Tranter says: “I am not convinced that there is much of a demand among IFA clients for this product. The critical illness benefit of £5,000 is not going to go that far in changing someone's lifestyle. If there is a need for life cover then it should apply on death by any cause not just by accident. This leaves you with a cut down PMI plan with a £15,000 a year claim limit or a health cash plan.”
Assessing the cover available on the plan Carr says: “The limits for each claim and overall annual limits could prove to be restrictive, but this is reflected in the cost of the plan. The brochure quotes up to £7,500 as being the cost of a hip replacement, but the maximum payable under the policy is just £5,000.” Lewis May thinks the cover is poor. Tranter thinks the survival period of 28 days is higher than most critical illness cover plans on the market and the hospital cash benefit is payable for the first three nights in hospital. Jones says: “The amounts available in each section seem to be OK in most cases, but looking at knee replacement, hysterectomy, heart and cancer, the limits are insufficient to cover all costs associated with treatment. This could leave the patient with significant additional bills that a more expensive policy would have covered.”
The panel next consider the type of client for whom the plan is suitable. Jones says: “I would suggest offering this type of policy to individuals or the self employed as having an element of cover rather than none.” Tranter says: “Probably the bottom end of the market, where clients cannot afford PMI but can afford a little more than the cost of a healthcare cash plan.” Carr thinks it would suit any client who would like cover for major illnesses and disabilities treated quickly and/or privately and someone who is concerned about the overall cost of cover. Lewis May suggests it is used in the short term pending the arrangement of a more comprehensive package.
Turning to the marketing opportunities the plan will provide, the panel are divided. Jones thinks it would provide access to people who are looking at more than a cash plan but cannot afford full PMI. Carr says: “Many clients would like PMI but are put off by the high costs. I can see the plan being popular, although it is likely to appear attractive to clients who, like myself, are over 55 who will have to seek other, expensive cover at 65!” However, Lewis May and Tranter disagree. Lewis May says: “Few, other than expatriates and other offshore returnees.” Tranter says: “Probably its best use is as a direct marketing exercise. The likely rewards are hardly worth spending an hour going through and explaining from an IFA's point of view.”
Analysing the plan's useful features and strong points Tranter says: “The ability to provide a cash sum to have certain procedures carried out privately without worrying about NHS waiting lists and it is probably cheaper than PMI.” Carr likes the monthly and annual costings, that hospital cash benefit is payable for stays in private hospitals and the inclusion of critical illness cover. Lewis May says: “Simple documentation and the medical assistance package could be a help.” Jones thinks the low cost, critical illness cover, death benefits and case management are plus points.
Looking at the plan's disadvantages, Lewis May says it is a little known insurance group and Carr thinks the list of illnesses and disabilities is too restrictive. Tranter says: “The lack of premium guarantees, the fact that death cover is applicable only to accidental death, critical illness cover amounts may not be enough to finance lifestyle changes, the critical illness deferred period is longer than that for most established critical illness cover players, the exclusions, notably the pre-existing conditions exclusion and the lack of reputation.” Jones highlights the low maximum cover limits and automatic removal at age 65.
Asked what they think of Berkeley Alexander's reputation, the panel has mixed views. Carr thinks it is good. However, Jones says: “I have no information to go by. We do not have an agency with it.” Lewis May thinks it is well respected but has little press coverage. Tranter agrees and adds: “Berkeley Alexander is an established player in the accident, sickness, unemployment and redundancy market and it does not have the financial clout or name awareness of a major insurer.”
The panel next assess which plans they see providing the main competition to hospitalCARE. Carr says: “It depends on the age of the client and difference in cost, but any of the current popular plans from PPP Healthcare, Bupa and Norwich Union, for example.” Jones suggests Simply Health's plans and Bupa's work assured and high level cash plans. Tranter says: “As a hybrid product there are few direct competitors. Pinnacle is active in this market. Many of the major PMI providers including BCWA have cash plans that could be seen as competition.” Lewis May mentions Royal & SunAlliance.
Comparing the premium rates of hospitalCARE with similar plans, the panel is again divided. Tranter says that given the hybrid nature of the plan it is hard to do direct premium comparisons. It is, however, cheaper than most PMI plans, but given the reduced benefits you would expect that.” Carr says: “Premium rates are very competitive, but cover is limited, as are the medical conditions that are covered.” However, Jones thinks they are similar to other plans and Lewis May thinks they are fair.
Only Tranter comments on the commission payable to IFAs. He says: “Commission is 25 per cent initial. This is very good for this type of product.”
Turning to the product literature, the panel is in agreement. Tranter thinks the literature is rather functional. Lewis May says: “It is suitable for mailing but it is lacking in product detail.” Jones thinks the literature is nothing special. Carr says: “Everything, including the proposal form and direct debit mandate, is set out clearly in one brochure. The brochure is well laid out, easy to read and easy to understand.”
Finally, Carr says: “If the range of medical conditions was not so tightly defined and if I did not have to face the daunting task of seeking far more expensive cover at age 65, I would seriously consider the plan for myself. Even so I would almost certainly recommend the plan to clients.”
Jones says: “It is pleasing to see a company being innovative in the market and trying to offer a new style of cover. In my experience, schemes like this with limits can often cause more trouble in the event of high claims, by making the patient pay any shortfalls. Being kicked out at 65 is a major disadvantage unless there is an alternative policy to go to without the need to declare medical history again.”