Individual PMI– the six week wait plan

“The six week option is a great way of reducing costs and making PMI more affordable,” says Murdoch. “While PMI sales are up year-on-year, we have seen an increase in enquiries from customers about how to reduce costs. They still want PMI but they want to reduce their premium, and the six week plan is a good way to do this. Everyone is strapped for cash at the moment.”

Six week plans can be particularly beneficial for older people, who face higher premiums and are living off their investments and pensions. Standard Life decided to first introduce a six week option on its over 55s product, Esprit, and has since incorporated it into all its individual and corporate plans.

Ronjit Bose, head of product development for healthcare at Standard Life, says: “The six week option strikes a nice balance between the reassurance of having PMI if things go wrong and helping to manage costs.”

The majority of six week plans tend to be sold directly to consumers, rather than through an intermediary. AXA PPP says two thirds of its six week plans are sold direct and Standard Life says a “significant majority” are sold direct. Aviva’s figures are more evenly split, with 43% sold direct and 57% through an intermediary. One intermediary that likes six week plans is Mike Hudson of Bedfordshire-based Health Connections Direct.

“The major benefit of six week plans is one of cost. It makes PMI viable for certain people in certain age brackets to introduce that feature,” says Hudson. “In broad terms six week plans work very well because the customer can have an outpatient consultation with a specialist straightaway as well as outpatient diagnostics – it doesn’t limit those. The only real element of concern is at the point of hospitalisation, but a lot of elective stuff can’t be handled within six weeks anyway. Only 5% of six week plan customers tend to end up within the NHS.”

Hudson believes six week plans are even more relevant in the current economic environment when people are concerned about their outgoings.

“If a customer has a full cover plan and wants to reduce their premium they will usually either build in an excess or downgrade benefits. The six week option provides a way of maintaining a full level of cover rather than downgrading,” he says.

Hudson admits there are some drawbacks to six week plans. If a customer is taken to A&E because of a stroke or a road accident they will not be able to transfer into the private sector and so any concerns about hospital superbugs will not be addressed. In addition, intermediaries have to ensure customers fully understand the terms and conditions of six week plans.

“A lot of customers think the six week element is appropriate at the point they need treatment, but they can have an outpatient consultation immediately. It is only at the point the consultant says ‘I need you in hospital’ that they have to consult the NHS waiting list of that hospital to see if they will be treated within six weeks,” explains Hudson.

It is because of the potential for confusion that many intermediaries steer clear of six week plans. Tony Hulatt, head of healthcare at Leicestershire-based Brokerbility Healthcare, describes the six week clause as “wishy washy”.

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