Those who reach retirement age are likely to need private medical insurance (PMI) more than ever because the chances of becoming ill increase as we get older. Nevertheless, the costs of PMI also tend to rise quite steeply in order to reflect this increased claims risk.
Such high premiums can leave policyholders who end up not making claims wondering whether they can justify their outlay, which is why so many older people are being attracted to PMI policies that offer the chance to receive a substantial discount in return for a high "excess" - the first part of the claims bill that policyholders pay themselves.
Those going this route are advised to place the equivalent of the excess value - possibly from their pension lump sum - in a bank account specifically earmarked for their health needs. In the event of a claim this can be used to pay the excess but, if no claims are necessary, it remains in the policyholder's bank account as opposed to the insurer's one.
One such policy, WPA's Active Health, aimed at the over 55's, can offer premium discounts of around 80% for those who take a £5,000 excess. Spectacular savings can also be realised by those who take the other option of a £3,000 excess. For example, WPA account manager Tina Kemp recently achieved a joint annual premium of £1,400 for a couple, both aged 64, who had been paying £7,000 a year for standard PMI.
She says "Active Health is proving especially attractive with older high net worth individuals as they are just as keen to be prudent nowadays as we all are. I get referrals from policyholders who have been pleased with my advice because I know all my 1,000 policyholders personally and contact them regularly to see whether they need any help.
"One of main benefits of dealing with WPA is that you get on-going support. As a not-for-profit association, we concentrate on our customers interests rather than the shareholders. So at renewal I will enquire whether their policy needs tweaking and, if a policyholder has been treated in A&E, I can even remind them that they are entitled to claim back £100 a night for NHS treatment.
"I don't know any other insurer that helps with claims "continues Tina. "We will even advise people not to switch to WPA when it's not in their interests. Active Health, which provides annual cover of up to £150,000, is unusual in having no upper age limit for joining and in offering an excess that operates on a "rolling basis". This means that, once your treatment costs exceed your excess limit within a 12 month period, WPA will cover the cost of all treatment for a further 12 months - this works well as most conditions are resolved within 12 months and even then the excess applied is per year and not per condition. Many other policies, however, require you to pay the excess twice if the claim continues across the policy renewal date, and some also make you pay an excess per claim - with WPA you pay on a rolling basis of per person per year.
A further advantage of Active Health is that policyholders can include additional "emergency abroad" cover for up to 70 days per trip - subject to an annual maximum of 180 days and £500,000. This extension, which can be ideal for those who regularly visit overseas holiday homes, provides treatment for medical emergencies and for evacuation/repatriation via air ambulance - even for members of immediate family who are not actually policyholders. Most travel insurance each year start again and cease to cover an existing serious medical condition, with Active Health you have the confidence of being covered for medical conditions that arise once you join Active Health - without the medical clock starting again each year at renewal.