Common questions about private medical insurance (PMI)

When speaking to my professional introducers (mainly IFA's and Accountants with the odd general commercial broker thrown in for good measure) I come across two common themes/questions very regularly :

1) Isn't private medical insurance expensive (and by inference therefore, won't clients avoid buying it) ?

2) Which clients should I approach for medical insurance - I look after older clients and high net worth (HNW) people (who tend to be older) and I assume that cover would be expensive or previous health would prevent us helping them ?

Looking at these queries in turn. Well anything can be 'expensive' obviously. If you go for the top level of cover and no excess then yes the cover might be expensive. There are however a lot of factors at play here. Firstly, what are the clients expectations - if they think PMI cover is going to be £ 30 a month then anything over £ 40 is likely to be unaffordable. I think though that most people probably have more realistic expectations.

Clients buy medical insurance for several financial and lifestyle reasons (although individuals and companies tend to have a different buying profile) but they also buy because of life experience with the NHS, past medical history, requirement to choose when/where/how they are treated medically and so forth. In point of fact pricing is really only the first element that we need to consider. Sure, if cover is prohibitive in terms of cost then the 'sale' falls through at the first hurdle but there is a lot more to medical insurance advice than how much the plan costs and that is a part of the discussion, the 'painting of the picture' with clients that I undertake. On balance though I think PMI is actually cheaper than many people expect. Certainly for new cover my experience is that individual purchasers overestimate the cost by around 30% on average. {urchasers of company paid cover will likelybe even more pleasantly surprised as PMI cover bought through the business can be considerably cheaper per capita than individual plans. As a general rule I would suggest that two directors looking to buy cover for themselves and their family would be significantly better off putting together a two employee plan rather than considering two single plans by a factor or several hundred pounds.

The second  of the questions posed at the beginning of this article (which clients should I approach) is simply a marketing/segmentation issue. Who is likely to want or need cover within your client portfolio. Broadly those advisers with older or HNW are still very much ok to become involved in the PMI market.

My experience is that older clients are more likely to have the cover in the first place and to be paying too much for often outdated cover. As a general guide if the client has not undertaken a review of their cover in the last 24 months I would advise considering at the next renewal if better cover can be obtained at a lower cost. The chances are, that subject to some basic checks on recent health we can move the client and save money or take over the agency of their plan and reduce costs by negotiating with their current insurers - either way, ensuring their medical insurance plans are fit for purpose.

If an older or wealthier client doesn't have cover in place at the moment we can easily put newly underwritten cover into position for them. There is no loading based on previous health so they will just be looking at standard, age rated cover which is easily ossible to put in place well into their late 70's or 80's.

So in essence, whether they have cover in place at the moment or want a new plan we can certainly help many older clients. My personal PMI clients tend to be over 40 and mostly professionals and HNW imdividuals plus a smattering of directors who for whatever reason are not on a company based plan I look after.

There is a complication though. When IFA's or other other advisers want to help more financially aware clients on private medical insurance there are complex insurer products and previous medical histories to juggle when speaking to clients on this subject. If a review of cover is needed the insurers have a range of medical questions and transfer criteria that not only affects the ability to move clients around the market but also the price at which we can do so. The client might need a comparison of the plan options available between two or three or even more insurers.

All of these factors are why many IFA's and accountants would choose to work with me, a specialist in the medical insurance field to provide the advice on their behalf as an introducer to my PMI practice.

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I hope that this article helps with some context if you are involved or considering how to get involved in PMI advice - I am always happy to speak to new potential professional introducers. Just e-mail me on : philknight@pch.uk.com or call : 07792 075748.