Legal & General has launched a PMI product with the aim of rewarding loyal customers by helping to s...
Legal & General has launched a PMI product with the aim of rewarding loyal customers by helping to subsidise the future costs of cover.
The Healthcare Rewards scheme will give the policyholder every three years a loyalty reward and a no claims bonus (NCB). If policyholders make a claim within a three-year period, they lose their NCB but can still be awarded their loyalty rewards. Policyholders can use their entitlement in three different ways on their policies, including taking a discount in the cost of cover for the next three years.
Alternatively, they may wish to take a payment holiday for a number of months or they may opt for a refund of premiums.
Cover under the plan includes a full refund for inpatient and day care, hospital costs and surgeons' or anaesthetists' fees, a full refund for follow-up outpatient treatment up to three months from leaving hospital and a full refund for parent accommodation and private ambulance.
Outpatient cover, specialist consultants, tests, x-rays, pathology and physiotherapy are limited to £750pa, this includes up to six sessions of physiotherapy.
Premiums are calculated individually, according to age. Policyholders may choose to either have the premium increased annually, or opt for a fixed increase every three years.
A couple aged 40 opting for a £200 excess under the 5%pa increase option, will pay £1,277 in year one, £1,341 in year two and £1,408 in year three. This will entitle them to either a premium holiday of two months in the following year, a premium discount of 6.7% for the next three years or a refund in premiums of £362, if they do not claim during this period. If they do claim they will still be entitled to a loyalty reward equating to one month's premium holiday, a 4.5% discount for the next three years or a refund of £242.
Payment protection is automatically included within the cost, providing payments of the premium for up to 12 months, should accident, sickness or unemployment prevent the policyholder from working for more than 30 days.
The policy also provides the option of a choice of three voluntary excesses to help reduce the premium. The standard excess is £100, but if the policyholder opts to increase this to £200, then they will enjoy a 7.5% discount. A £400 excess will provide a discount of 15% and a £1,000 excess will provide a 40% premium discount.
Andy Sampson, head of planning and research at L&G, said: "It is the combination of loyalty reward, NCB and payment protection within the price which makes this policy unique and perfect for the two markets we are aiming at: those with young families and those closer to retirement."
Commission rates are 40% initial and 7.5% renewal.
The current growth in the corporate PMI market may be reversed as a result of cost pressures, according to a recent survey by consultant group Towers Perrin.
Employers are becoming more concerned over the escalating cost of providing PMI cover to employees, with the effect that these costs are preventing companies setting up new schemes or from expanding existing ones.
The survey of 110 major UK employers, 70% of which employ 1,000 staff or more, found that over half felt that they were unable to control these rising premiums.
A mixture of medical inflation, increasing claims, insurance premium tax and employers now paying NI contributions on those employees covered, has meant that the cost of PMI as a benefit has risen dramatically.
Around 39% of respondents experienced a per capita increase of over 10% in the last year, with over a third of these seeing an increase of more than 20%.
Also highlighted by the survey were the two most important reasons companies offer PMI to their staff. These were the importance of PMI as part of a competitive package to recruit staff and also as it enables employees to receive timely and appropriate treatment so that they spend less time off sick.
However, the report concluded that in order to keep the costs of running their plans to a minimum, employers must review the cover they offer. The report said: "Companies should analyse and review their health plans to ensure they are co-ordinated with their human resource strategies and broader business objectives. It is feasible to design plans that both meet employees' needs and address employers' concerns about increasing claims and spiralling costs."
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