This is particularly the case with critical illness insurance, where most policies will automatically extend cover to the policyholders’ children. This can include legally adopted and step children as well as any the policyholder may have throughout the term of the policy.
There are conditions attached. The sum assured is usually fixed at 50 per cent of the policyholder’s cover, subject to a maximum of £25,000, but there are variations. For example, VitalityLife’s serious illness plan allows policyholders to add up to £100,000 of extra cover for children, and LV’s plan doubles the payout for 10 conditions, including blindness and paralysis of a limb, to a maximum of £50,000 if the claim is the result of an accident.
Cover usually kicks in when the child is 30 days old and runs until they are 18, or 21, especially if they remain in full-time education. Furthermore, a claim will not affect the policyholder’s overall level of cover.
Although there are limits on the payment, Steve Bryan, director, intermediary at Legal & General, says it can still be a valuable benefit to parents if a child becomes seriously ill.
“It may not be the primary reason they take out cover, but it could pay for the cost of treatment, time off work or additional care for the child or their brothers and sisters,” he says.
Number crunching
The claims statistics show how important this benefit can be. Although the number of children’s critical illness claims is dwarfed by those for the big three conditions: cancer, heart attack and stroke, insurers regularly report this type of claim in their top five.
For example, children’s claims made up 3 per cent of all of Royal London’s critical illness claims in 2015. This made it the insurer’s fifth most common reason for a claim, behind multiple sclerosis and the top three.
Likewise, while insurers often promote this as a freebie, their claims bills for this element of cover are substantial. Aviva paid out £2.3m for 135 claims across its Friends Life and Aviva businesses in 2015, while Legal & General paid out £1.9m, benefitting 106 families.
Further analysis of Legal & General’s claims shows the average paid out in 2015 was £18,181, with the largest claim £26,000. And, just like the overall critical illness statistics, the most common cause of child claims was cancer, accounting for 60.5 per cent of claims, with strokes in second place at 11.4 per cent.
The insurer also found that the average age at which a child makes a claim is seven, with the youngest just one month old.
Small print
Although this is a common benefit, if it is particularly important to a client to have child cover, policy differences mean it is essential to study the terms and conditions.
First, not all insurers automatically include child cover. According to Defaqto, 47 of the 56 critical illness products on its database include cover for children, with the simpler products and those that focus on business protection more likely to drop it. While this could appease those who do not have any need for this benefit, Tom Connor, director at independent advisers Drewberry Insurance, says it makes little difference in practice.
“The price difference between those insurers with and without children’s cover as standard would only be minimal at best,” Mr Connor explains. “It is about the value it adds in terms of parents’ peace of mind,” Mr Connor explains.
For those wanting the benefit, a more important feature to look out for is the waiting period before the cover comes into effect. Defaqto research shows that 60 per cent of insurers have a minimum age for cover of 30 days, but some, including Royal London and LV, cover children from birth.
“A 30-day minimum age will tend to exclude any congenital conditions,” says Ben Heffer, insight analyst (life and protection) at Defaqto. “It does not seem entirely fair to impose this restriction where the child is conceived and born after inception of the cover, so credit to the providers that cover children from birth.”
Medical needs
Children are also catered for by private medical insurers who recognise that parents want the best for their kids and allow them to extend cover.
Children will receive the same cover as their parents, but some insurers will also include cover specifically for them. For example Axa PPP healthcare includes six sessions of speech therapy a year for children aged 14 and under if they need it for developmental reasons; laser treatment for port wine stain birthmarks, and surgery to correct bat ears.
It is also common practice to include some benefit towards the cost of accommodation if a parent needs to stay away from home while their child is in hospital.
There is a charge to include a child. For example, a parent would pay less than £20 a month for Axa PPP healthcare’s personal health product for a child aged 10 or under.
New forms of medical cover are also emerging for children. For example, last July, cash plan provider Medicash teamed up with Medex Protect to launch a corporate medical insurance plan to help families meet the cost of caring for sick children, regardless of whether the parents have cover themselves.
Cover includes consultations and diagnostic tests to aid with a fast diagnosis, and benefit for ancillary costs such as overnight accommodation near to the treating hospital, car parking, additional childcare cover and kennel and cattery fees.
It can also be extended to include cover for surgery undertaken on a day case or single-night-stay basis in most private hospitals across the UK.
Everyday healthcare
It is also common for healthcare cash plans to include children within a parent’s policy. Many of the traditional not-for-profit providers include cover for children automatically. For example, Simplyhealth’s plan includes free cover for up to four children under the age of 18, while WPA Health Insurance’s plan allows for five child family members at no additional cost. Others, for example Bupa, prefer to offer both individual and family options.
Whether automatically included or incurring an additional fee, Mr Heffer says it is important to know what cover they get. “Some policies give cover for each child, while others will share the benefit across all children, which can work out to be less generous if you have a large family,” he explains.
As an example, on Westfield Health’s Good4you cash plan, child cover is included at no additional cost, but the benefit for optical, dental and dental trauma is shared between all the dependent children. However, with children entitled to free NHS dental treatment and eye tests, this is less of an issue.
Freebie care
As well as taking out a product that includes cover for children, parental concerns are also addressed via the added-value extras insurers include on their protection policies. Helplines are commonplace, allowing parents to speak to medical professionals about any concerns they might have with their offspring.
And many have gone further. For example, Aviva includes second-opinion service Best Doctors on its protection plans and also allows policyholders to take out optional cover for global treatment. This provides policyholders with access to £1m of treatment anywhere in the world if it is not offered through the NHS.
Paul Dalgliesh, head of protection propositions at Aviva, explains: “These benefits are not dependent on a claim and, as they apply to all family members, can provide peace of mind to parents if a child is unwell.”
With their children’s health a major concern for parents, being able to extend cover to them is important. And while their health might not be the primary reason for taking out a policy, just knowing that these extras are included can bring considerable reassurance.
