ProtectionMar 25 2014

10 reasons advisers should look at health cash plans

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      Health cash plans are insurance products that provide money towards healthcare bills.

      Policyholders can claim money back towards vital health costs such as eye care, dental treatment, physiotherapy, diagnostic consultations and many policies also provide fixed cash payouts as well as access to valuable health and wellbeing services.

      According to Laing & Buisson cash plans covered an estimated 3,731,000 people throughout the UK at the end of 2012, equivalent to an estimated 5.9 per cent of the UK population. The volume of demand for UK health cash plans remained largely static, moving up by just 0.1 per cent, which follows consecutive annual falls in preceding years.

      Few advisers, however, have cash plans on their radar when talking to clients and there is a view that despite its popularity amongst employers and the public, not enough respect and consideration is given to this type of plan by financial advisers.

      So let’s look at some of the key issues.

      Whether volunteered by the client or suggested by the adviser, the question of complimentary benefits alongside auto-enrolment is a no-brainer

      1. Strong history and potential for growth

      According to Laing & Buisson demand for health cash plans reached a peak of around 4m contributors in the mid-1960s, and was on a gradual downward trend in the 1970s and 1980s, before stabilising in the 1990s and beyond.

      Some of the factors driving strong growth in company paid schemes include increased interest from intermediaries, the widening appeal of workplace health solutions, add-ons such as occupational health, screening and employee assistance programmes (EAPs), and generally increased focus on flexible tailored policy design by cash plan providers.

      Companies have also been attracted by very competitive pricing, as average company paid prices have fallen in real terms in the last few years.

      Cash plans have become as popular as health insurance among UK workers, according to a study from PMI Health Group. The survey of 600 adults by TNS found that 11 per cent of staff rank cash plans as their most valued benefit.

      Private medical insurance (PMI) also received 11 per cent of the vote. Contributory pensions were most popular (31 per cent), followed by life insurance (12 per cent).

      Close to three quarters (73 per cent) of Intermediaries surveyed by cash plan provider Health Shield said their Health Cash plan portfolio had increased between 2010 & 2012.

      2. Employers and auto-enrolment

      Total spending by businesses on group schemes in the UK 2012 was £58m, which is not an insignificant amount. In addition, the timing has arguably never been better to talk to companies about their employee benefits package as auto-enrolment is creating opportunities for advisers beyond just the pension scheme.

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