Is it time to reconsider cash plans?
With their low premiums, healthcare cash plans are often overlooked. But, as Sam Barrett explains, these products have plenty to offer
Given the range of benefits, selling cash plans should be simple. Howard Hughes, head of employer marketing at Simplyhealth, believes there is one important ingredient when it comes to selling cash plans. “Cash plans are not well understood so the benefits need to be explained. Once someone understands what they cover and how to use them, they are perceived as very valuable,” he says.
This value comes from the fact that, for most people, it is possible to claim at least once or twice a year. For example, on Westfield Health’s Foresight Healthcare corporate plan, the annual premium for level one cover is £52. Claim for the full dental benefit, which is easily possible with a couple of check-ups with a private dentist, and an employee is already £3 up. Add in a claim on the optical benefit and a couple of sessions with a physiotherapist, and they could be looking at getting back twice what their employer paid for the plan.
Even on individual schemes, a policyholder can get back more than they paid for the plan. On its level one option, which costs £130.20 a year from June 2012, Simplyhealth’s Simply cash plan offers £90 of dental benefit and £90 of optical benefit. On top of this, policyholders can claim back 75% of the cost of therapies, up to £50 a year, and 75% of the cost of consultations, up to £150 a year.
Given the return on investment, it can be a relatively easy sale, sitting comfortably alongside advice on individual protection and healthcare products. Further, while claims will be infrequent or even nonexistent on the more expensive products, clients will be able to claim on a cash plan at least once or twice a year. This can help to cement a relationship with them.
While it is possible to introduce cash plans to individual clients, the low price of the product can make it difficult to justify selling them this way. However, the numbers available on corporate schemes make it a much more attractive proposition.
At just £52 a year – or less – per employee, advisers are reporting growth in sales to employers. Often they pick up the tab at this low level, allowing employees to pay extra to increase cover or to extend it to their dependants.
While the costs can make it a relatively simple sale, with employers’ benefit budgets under pressure in the current economic environment, it is often possible to introduce a cash plan at little or no extra cost to the employer.
By adding a £100 excess to a medical insurance scheme, you can secure a discount of between 7% and 10%, which can be used to pay for a cash plan. Claims that then fall into this excess can be picked up by the cash plan, either through the excess or the specialist consultation benefit. Matthew Judge, director at Jelf Group adds: “There is a risk as you’re potentially removing the gate keeping properties of the excess but it is a perfectly valid approach.”