Your Money - Your Future
Health & Financial Protection: How to Get a Good DealBack to News & Views
While we may often neglect our health, many people are finding it at the forefront of their thoughts in the current climate. People across the world are taking measures to avoid the virus, both for their own wellbeing and to protect the vulnerable people around them.
On a more positive note, many are also using the lockdown period to improve their general health by cooking more, exercising outside, and taking advantage of online fitness classes.
Prevention is certainly better than cure. But some health problems are unavoidable and the outcome is not always a happy one.
A good financial plan has contingencies in place to deal with worst case scenarios. While it is always painful to lose a loved one or live with a serious illness, there are measures we can take to reduce the financial pressure.
The Main Types of Insurance
Health and financial protection are covered by four main categories:
- · Life insurance –pays out a lump sum in the event of death
- · Critical illness – pays out a lump sum on diagnosis of a serious illness
- · Income protection – pays out a regular income if you are unable to work for health reasons
- · Private medical – covers certain private healthcare costs
Many people could benefit from these types of insurance, but the most suitable package will depend on your circumstances, health, and affordability. It is always worth seeking advice to find out exactly how much of each type of cover you need.
While it is no secret that different providers charge varying premiums, it is not always clear why. A low-cost plan may be budget-friendly, but might not cover everything you need.
Here are the main things you need to look out for:
- · If the starting premium is low, check if this increases every year. While this may suit you if your earnings are expected to rise, ultimately it could work out more expensive than a fixed-cost plan.
- · Remember that when you receive an initial quote, this is unlikely to include underwriting. Your premium could increase when you declare any medical history or lifestyle factors.
- · Insurers have varying underwriting criteria and might treat your medical condition or risky occupation differently. You may get a better deal by selecting a different insurer if your premium increases.
- · For Critical Illness cover, check the range of conditions covered. A cheaper plan will most likely cover fewer conditions than a more expensive plan.
- · For Income Protection, check whether you would be covered if you are unable to work in your own occupation, or if the plan would only pay out if you were unable to work at all.
- · Private Medical Insurance has the widest variation, as each plan has its own range of treatments, cover amounts, excesses and approved healthcare providers. It is important to review the plan conditions carefully to ensure you get the best deal.
While a budget policy may best suit your needs, it’s vital that you understand what is and isn’t covered. It might be appropriate to take out more comprehensive cover at a later date as cashflow allows.
The most important thing to remember is that you need to be honest about your health, family history and any lifestyle factors such as a dangerous occupation, smoking or hazardous sports. If the insurer later finds out that something was missed on your application, it could void the whole policy, even if the non-disclosure has nothing to do with the reason for the claim.
Check What Your Employer Offers
Once you have decided on the insurance cover you need, your first port of call should be your employer to check if they can offer it as a benefit. Some large companies will offer all four insurance types to their staff. Smaller companies may not, but it is worth asking, as group life and health insurance can be extremely cost effective.
You may need to pay something towards your cover, but this is likely to be far less than you would pay for an individual policy.
If you own a business, there are tax benefits to setting up insurance (for yourself and your employees) through the company.
When changing jobs, think about the overall remuneration package including any insurance benefits. But remember, when you leave your employer, you will also lose your cover. There could also be limits on how much cover you can have through your employer. In some cases, it is worth having some personal cover as a top-up.
Look After Your Health
Healthy people are less of a risk to insure, and can therefore benefit from the most competitive premiums. The cost of insurance can also increase with age. Here are some ways in which you can keep your premiums under control:
· Take out as much cover as you can as early as possible. If you are in good health, delaying this decision will only increase your costs.
- · Maintain a healthy weight.
- · Take frequent exercise.
- · Avoid smoking, drugs and excessive alcohol use.
- · Have regular medical check-ups.
- · If you have previously taken out insurance and the costs were high due to a health issue, it may be time to shop around again. If you have lost weight or stopped smoking for more than a year, this could save you money. Some medical issues only affect your premium temporarily, so it can be worth checking again if you have been well for at least five years.
Remember that any increased premiums will continue for the life of the policy, so it is up to you to check if you can get a better deal elsewhere.
Be Wary of Perks
Many insurers have started to offer discounts on fitness products, and even coffee and cinema tickets. While this does add an incentive to a fairly dull area of financial planning, there are a few questions you should ask first:
- · Would you use the discounts even if they weren’t offered with the policy?
- · Is the policy competitive without the discounts or are the perks paid for with higher premiums?
- · Are the premiums conditional, for example on meeting health and fitness goals or tracking steps? Does this suit your lifestyle?
While buying an insurance policy is very simple, getting the best deal is much more complicated. It will depend on your needs, circumstances, health, lifestyle and how much you can afford to spend on premiums. A good financial adviser will not simply sell you a policy, but will work with you to ensure you have the right combination of insurances at the best possible price.
Please don’t hesitate to contact a member of the team if you would like to find out more about your protection options.