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Medical insurance

Coping with cancer

This page has information on different types of insurance for people with medical conditions. There is information about

 

Income protection insurance

When long term illness brings you to a standstill, you still need a regular income to pay off all the bills and any additional ones relating to your illness. Income protection insurance is designed to provide you with a monthly income if you develop long term sickness or disability. The maximum amount of cover you are allowed to take out is usually about half of your gross yearly earnings. Any plan that you decide to take out gives you a regular income and can be inflation proofed up to your retirement age.

When you start your plan, you will be offered a choice of pre benefit time periods. This is the length of time that you will have to be off work before the benefit begins. It can be from 4 to 52 weeks. The longer the waiting period, the lower the premiums you will have to pay. The cost of the plan will depend on

  • The amount of cover you need
  • Your age
  • The type of job you have
  • The length of the waiting period you choose before the benefit starts to pay out
  • Your planned retirement age

Premiums for Income Protection Plans are usually paid yearly or monthly by direct debit. There are 3 standard types of cover that you can choose from

  • Level Cover – what you pay and what the policy pays out stays the same throughout the term of the plan
  • Increasing Claim – the pay out increases at a 5% rate during the course of a claim
  • Both what you pay and the potential pay out increase at a 5% rate each year throughout the term of the policy

Income Protection can start at any time you want, which you state in your plan. It will run from the deferral period to one of the following, whichever is soonest

  • The termination of the disability or illness
  • The death of the insured person
  • The plan expiry date, which is usually 50, 55, 60, or 65 years old

You have to keep up your premium payments to be covered.  You must also tell your insurer if your circumstances change or you may not be covered.  So if you change your job or become unemployed you must let them know.  If your salary goes up you should review your cover to make sure it is still enough.  The Association of British Insurers say in their guidance that you can't get a higher pay out than your earnings.  So also let them know if your income goes down.

As with all insurance, make sure you know when you take out any policy what is covered and what is not.

 

Critical illness insurance

This type of insurance is designed to pay out if you have a serious illness that is specified on the policy. There are policies designed to cover women's cancers, with cover for breast, cervical and ovarian cancer, for example. Critical illness insurance is designed to provide a tax free lump sum. You can arrange to cover extra costs such as nursing care, paying for a stair lift, widening doorways, or ground floor bedroom conversion costs for example.

Critical illness insurance usually only covers specified ages, usually up to 55 or 60.  Typically with cancer, you become ineligible just at the age when the cancers covered become more common.

Remember – you need to understand how likely you are to get any of the conditions in the age range covered, compared to the cost of the premiums and the size of the pay out. If you don't become ill with any of the conditions covered during the period you are insured, you will get nothing back.

Insurance companies do not usually cover any illness or disability that you had at birth or when the cover began. If you have (or have had in the past) a serious illness, you may not be able to take out a policy. If you don't disclose all your previous illnesses, you may find they may refuse to pay out should you need to make a claim. You may be able to get cover if you pay a higher premium, or buy a policy that covers other illnesses, but not an existing illness (or any related illness). You may also have to pay a higher premium if a serious illness such as cancer runs in your family.

Different policies cover different illnesses. Each policy will only cover the illnesses set out in its key features document covering all the important information for the policy. There are some medical conditions that are normally covered by most companies. Then there are additional medical conditions that some companies cover. Critical illness policies usually have exclusions that vary between companies. Again it is essential to look at the key features document. This is also a good way of comparing policies from different insurance companies.

You can choose critical illness cover as an extra benefit on a life insurance policy. This usually means that the policy pays out if you die or suffer a critical illness. These plans generally only pay out once and then end – so they don't continue to provide life cover after paying a critical illness claim. You can include critical illness cover in your mortgage, but most mortgage companies insist that you take out life cover at least for the term of the mortgage as well. Some plans also include critical illness cover for your children or your partner. For an extra cost, you can have a critical illness policy that pays out at diagnosis and then again if you die.

For most policies you pay a regular premium, monthly or once a year. The amount of cover you can buy obviously depends on the premium you can afford. The premium cost depends on your age, sex, health, occupation, whether you smoke, the amount and type of cover you need and how long you need the cover for. Premiums may increase over the time that you have the policy. But some companies offer policies that guarantee never to increase the premium during the term of the contract.

You can buy a policy direct from an insurance company or through an Independent Financial Adviser or other salesperson. You fill in an application form, decide the amount and type of critical illness cover you want, and the period you want the cover for.

You have to give details about your occupation and health. Depending on your medical history and the amount of cover that you want, the insurance company may ask your doctor for a medical report. You can ask for a copy of the report if you want to do so. You may also need to have a medical examination. The insurance company will pay for these.

 

Private medical insurance

Private medical insurance is designed to cover the costs of private medical treatment for curable short term illnesses and some long term ones.

Insurance companies do not usually cover any medical condition you've had in the 5 years before you start your policy. This does not just mean diagnosed conditions. It includes any condition for which you've had symptoms, advice, medication or treatment whether it's been diagnosed or not.

When you apply for your insurance you may choose, or be asked to, fill in a form called a moratorium. This asks for details of your medical history. Conditions you have had in the past may automatically become eligible for cover later, but only if you have no symptoms, treatment, medication, tests or doctors advice for that condition for a set period after your insurance cover starts.  This varies, but is usually 2 years.

There are some conditions which will probably never be eligible for this delayed cover because they will always need regular or occasional treatment, medicines, tests or advice.

All insurance policies are different. They cover different things, to different amounts and for different periods.  So it is important that you know exactly what is covered before you sign on the dotted line. You need to know

  • Which medical conditions are covered and which are not
  • How long your cover lasts and whether there are any other time limits that apply during the policy
  • What types of treatment are covered and whether there are any limits to amount or cost of treatments you have
  • What the maximum is that the policy will pay out – both in total and for any individual payments 
  • Any circumstances that the insurance doesn't cover
  • When cover might be withdrawn by the company

You also need to know that treatment is categorised as

  • Inpatient – this is when you go to hospital for private treatment or investigations and stay for one or more nights
  • Day patient – this when you go into hospital for private treatment or investigations but do not need to stay in hospital overnight
  • Outpatient – this is when you receive treatment, investigations or consultations which do not need you to stay in hospital either as an inpatient or a day patient

Your choice of cover will affect what you pay. The choices you will have include

  • Paying an excess yourself
  • Choosing a different grade of hospital accommodation
  • Paying for part of your treatment
  • Receiving treatment under the NHS when it is available within 6 to 12 weeks
  • Choosing to receive treatment at a specified hospital

Before you have any treatment privately, you should call your insurance company to check that you are covered for the treatment that you will have. Your GP and specialist will probably need to fill in and sign your claim form. Your specialist may recommend tests and admission to hospitals. Some specialists have their bills paid directly by the insurance company. Others will send the bills to you.

 

Long term care insurance

This type of insurance aims to pay for all or some of the cost of long term care you may need now or in the future. Through a lump sum payment in advance, or regular premiums, you can buy insurance to cover the cost of care in your own home or in a residential or nursing home. Long term care means just that – care that will be needed for the foreseeable future. Also care includes many different features, from someone to do domestic work in your home, through to respite care to give a carer a break, or a place in a residential or nursing home.

If you already have cancer, there are policies that cover the need for long term care insurance. It is possible to pay a single premium to buy a policy that will pay for care immediately (Immediate Need Plans). These policies guarantee future payments towards the cost of nursing or residential home fees for as long as necessary.

You can claim long term care insurance if you are unable to carry out an agreed number of normal daily tasks. This may include being unable to get around, wash, dress or feed yourself, or use the toilet without help. You may hear these tasks called activities of daily living or ADL. The policy will say exactly what is covered and at what point you can claim. Local authorities judge care needs differently. So qualifying for help from your local authority, doesn't necessarily mean you can make a claim on your policy.

To claim, you usually fill in a form and send it to your insurance company. They may ask your doctor for a report. They may also pay for independent medical advice and information about your condition. Once a claim is agreed, your insurance company can discuss the type of care you need and advise you on local services.  They may be able to arrange care for you. Some policies pay the care provider directly and some insurance companies may be tied to particular care providers.

With immediate need plans, the payment of the claim will usually begin straight away, without having to check your daily activity or get additional medical information.

Types of long term care insurance policies

There are 2 main types of pre funded policies. With traditional insurance, you pay a single or regular premium into a common pool to insure against future events. You can choose the type of care you want to have, which can vary in case your condition gets worse. If you cancel the policy, you won't get any money back and won't be able to claim after you have cancelled it.

Then there is the single premium investment bond. You can buy this at any age with a lump sum. The insurance company then take the premium payments out of the bond each month. If you never need care, the remaining value of the bond is returned to your estate after your death.

The cost of policies

Cost depends on your age, sex and state of health when you buy the insurance. There are obvious advantages to starting when you are young because the premiums will be lower and your medical history is likely to be better. But you will almost certainly be paying premiums for longer.

Cost will vary depending on whether you want cover for care in your own home, as well as residential or nursing care.

Look at the section on buying life insurance for guidelines on what to look for when choosing a policy. There are also organisations that can help you when choosing a broker or making a complaint.

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Updated: 8 August 2013