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The pick of the PMI

Over the last few years, menu-based flexible life and healthcare protection packages have won the hearts of IFAs and their clients. Advisers can mix and match various components to meet initial needs and then adjust them later to fit lifestyle changes. The good news is that similar flexibility is now available within the PMI field.

An IFA can recommend a package of protection that is tailored to fit the current needs of an individual, a couple or a family group at the outset and then put forward the case for any alterations that may be required later.

Each person covered may have their own separate mix of components. The benefits for the main breadwinner of a household, for example, may include outpatient treatment and convalescence – it is considered essential that they start working and earning after a hospital stay without delay – while those for their partner and children do not.

If yearly health assessments are to be included, those for women will concentrate on potential signs and symptoms of female diseases (such as those affecting the uterus and breasts) while those for men will focus on male disorders.

A typical product of the new genre works like this. There are five core options to choose from. Four of these cover the full costs of inpatient and day patient therapy and care for virtually the full gamut of acute medical conditions with no cash limits. These differ one from another in two main ways. First, in the inclusion or otherwise of outpatient treatment, physiotherapy, psychiatric therapy and certain GPor consultant-referred complementary treatments, such as acupuncture, homoeopathy and osteopathy, and second, in the application of cash limits for these “extras”.

What about core option number five? This is focused exclusively on providing cover for the treatment of heart disease and cancer. The protection is very wide – it includes the costs of consultations, diagnostic tests, radiotherapy and chemotherapy as an outpatient as well as inpatient and day treatment and care – but the concentration on the two types of condition keeps premium costs down.

Once they have chosen one of the five core options, clients, with their IFA to guide them, can – with one exception – go on to select any one or more of a number of additional nodules to add to it. The single exception applies to those who have opted for heart disease and cancer cover. These individuals can ask for an annual health assessment – I have already mentioned that the checks for women differ from those for men – to be included in their plan but the other options are not available to them.

There are three options. The first packages an annual health assessment alongside cash payments for each day or night spent in a private or NHS hospital, or as a contribution to the cost of opticians&#39 fees or, for hearing problems, audiologists&#39 fees.

The second is aimed at clients who are keen to become and stay physically fit. It too comes in package form. The emphasis of the annual health assessment is as much on physique and fitness as on looking for early signs and symptoms of disease. There are also cash benefits to help cover the costs of complementary medicine, chiropody and dietary advice.

The third and last of these other options is designed to help clients cope with the expenses that come with a period of convalescence. There are cash benefits designed to contribute to the costs of help around the home, a stay in a registered nursing or convalescent home, and taxi journeys to and from the place of any treatment that may follow a hospital stay.

Clients have 24-hour phone access to specially trained nurses with whom they can discuss their health concerns. They can also ask these healthcare professionals for guidance on claims&#39 procedure and how to select an appropriate hospital for the treatment of any condition diagnosed. There are three separate lists of medical establishments to choose from, each coming at a different premium price.

The first offers access to more than 200 private hospitals around the UK, the second includes those in the NHS sector as well, and the third offers an even wider choice. The lists include a number of centres that have been especially selected for their recognised expertise in certain types of diagnostic technique (for example, MRI, CT and PET scanning) and the treatment of diseases such as cancer of the breast and bowel.

Clients have additional choices over the annual level of excess – the selection ranges from a mere £100 to as much as £2,000 – and whether or not their premiums are reviewable annually or fixed for five or 10 years at a time. This premium guarantee facility applies only to the core opt-ions. The costs of the various additional nodules are calculated each year.

Until very recently, applications for new PMI cover were processed in one of two ways. With the so-called moratoria approach, which has come in for criticism from the Office of Fair Trading, applicants provide no underwriting information at the start. Their plan does not cover any pre-existing medical condition until it has been running for a period of typically two years. Even then, full protection will only begin if the planholder has not, during the 24-month waiting period, sought any medical advice or received any treatment for the disease concerned.

With the second method, the provider asks for details of the applicant&#39s medical background and then, depending on the information gleaned, offers one of two alternatives. There is the offer of full unrestricted cover or protection of a more limited kind, which excludes any claim arising from an identified and named pre-existing condition.

With the introduction of the new breed of flexible PMI plan, the world of underwriting and new business processing has now moved on. Applicants, who have certain medical conditions, may now be able to obtain unrestricted cover, although, as for life assurance and other types of healthcare protection, they may have to pay extra for it.

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