Critical Illness 

What policies are best for children's cover?

This article is part of
Guide to family protection

What policies are best for children's cover?

There are no income protection, life insurance or critical illness policies designed specifically to cover children as standalone products, thanks to the rules around ‘insurable interest’.

Insurable interest, according to the Association of British Insurers, is defined as: "The interest that a person has in something such as a particular property or another individual.

"This means the person would suffer a loss should that property or individual be harmed. In insurance law, you can only buy insurance for something or someone in which you have an insurable interest."

Therefore, with insurance policies that provide a level of cover for children, it automatically attaches to the parent’s critical illness cover (CIC) as standard. 

Generally, children’s cover will be limited to 25 per cent of the parent’s sum assured.

According to Deepak Jobanputra, deputy chief executive of VitalityLife, the automatic basic child cover is a boon, for the reason: “In our experience, people do not typically want to think about or plan for their child becoming ill.

“So it is automatic cover, and add-on options that will provide the most appropriate solutions.”

The level of cover for a child often depends on the level of critical illness cover, with a cap as to age (18 or 21 according to the policy). 

Phil Nash, product development manager for Active Quote, comments: “The level of coverage as an add-on is fairly comprehensive, although it is normally capped at £25,000.”

Children’s PMI

One exception is in private medical insurance (PMI), where children can be given standalone cover. 

As Rob Harvey, independent protection expert for Drewberry points out, the benefits are not paid to the beneficiaries but to the private hospitals that will provide the care needed. 

This means some PMI providers will underwrite standalone children’s medical insurance. 

Such standalone PMI policies can be obtained from Axa PPP Healthcare, which provides Personal Health cover that can be bought for children only, and Aviva’s Child Health Essential.

The Axa PPP plan offers a range of benefits and support services to cater for parents and their children, including a Health at Hand helpline, which is staffed by midwives, pharmacists and nurses who can support new parents, as well as help with accommodation costs (up to £100 per night) if a parent needs to stay away from home if their child is in hospital.

Also, for parents who already have Personal Health cover with Axa PPP Healthcare, new-borns can be added to their plan for free until the policy’s renewal date.

However, having separate PMI for children, can add to a parent’s bill. Although the monthly sums can be low, when this is added onto the cost of the parents’ own separate insurance policies, it can all add up. 

For Garry Webb, head of compliance for Roxburgh Financial Management, protection providers should do more to create standalone children’s cover outside of the world of PMI.