PruProtect Health Cover
PruProtect has introduced two new plans—Health Cover and Health Cover Optimiser. Health Cover is effectively a simple PMI add-on from sister company PruHealth to PruProtect’s Serious Illness Cover. By doing this, customers gain a useful 5% discount plus the convenience of one application form and a joined-up approach. Three levels of PMI cover are available on both plans—these are Comprehensive Cover, Primary Cover and Heart and Cancer Cover.
In this review however we focus on Health Cover Optimiser. This also looks to combine Serious Illness Cover with PMI but in an even more joined-up way.
It allows customers to choose how to receive their Serious Illness Cover benefit. They can either take the cash lump sum as normal, or can instead take a smaller cash sum and use the balance to pay for medical treatment. The choice is made at the point of claim, not before. For conditions not covered under the Serious Illness Plan, benefits are paid as with any other PMI plan.
The amount held back varies from £5,000 (e.g. for some types of minor surgery) up to £30,000 e.g. for treating advanced cancer. This is called the maximum contribution and does not vary if the actual cost of treatment is expected to be or turns out to be higher. Customers can however change their mind and receive a higher cash sum, when the PMI treatment for that condition would also stop. And, if the treatment costs less than the maximum contribution, the balance is payable back to the customer after one year.
The main benefit of this approach is savings of up to 25% on the cost of adding PMI cover. The maximum discount applies where the customer has £60,000 or more of serious illness cover.
There is also a second major advantage—bringing PMI cover under the same umbrella as long term protection cover should help encourage more financial advisers to more actively promote PMI and to consider it as part of the advice process. At present, some see short term plans such as PMI and HCPs as culturally too far removed from the long term products they are used to, and struggle to effectively market such plans or, more simply, take the decision not to do so.
PruProtect gives the example of a male non-smoker aged 29 who could take out a PruHealth plan for £34.34 a month. If they instead add the same cover to a PruProtect Serious Illness plan, the cost drops to £32.62 a month (Health Cover) or to £25.75 for Health Cover Optimiser.
For a female of the same age, the premiums would be £37.60, £35.72 and £28.20 a month respectively.
Plus points: The option to get significantly lower PMI costs while still maintaining the option to get full Serious Illness Cover benefits; Continues the PruProtect tradition of being highly innovative, with a focus on securing additional value for money for customers; Choice of two ways to add PMI and three PMI options with all the usual PruHealth benefits.
Not so plus points: Inevitably a more complex solution than buying a single product, but also a more complex sale for an adviser to make; Many IFAs are not (yet) comfortable advising on PMI, while the single high cost of this type of combined cover may put off some customers from buying any solution; However both potential issues can be overcome by advisers investing time in becoming familiar with the concept. Some advisers may prefer to keep health and long term protection cover separate; Potential problems at both underwriting and claims stages. Possibly lower benefits than other straight CI/PMI.
Website: http://www.pruprotect.co.uk.
Rating (max 10): Innovation: 10. Overall: 9. Platinum.