When can I claim on Long Term Care (LTC) Insurance?
An
Insurance Company offering LTC Insurance will normally pay out to a
policyholder based upon an inability to carry out some or all
Activities of Daily Living (ADLs):
Washing
Dressing
Using the toilet
Continence
Getting in and out of a chair or bed
Mobility
Eating and drinking
The claim and level of benefit may vary depending on how many ADLs
can be carried out or may be dependent on mental impairment.
In the event of a claim, the company will send you a questionnaire
in order to assess its liability. This will be completed in part
by yourself and in part by your own GP. It may also be necessary
to arrange a report from an independent professional medical specialist.
The benefits themselves are paid tax-free with some schemes because
they are paid direct to the care provider. Any shortfall between
the costs of care and the benefits will need to be met from other
sources.
If I take out Private Medical Insurance (PMI), what does it cover?
PMI normally covers such things as treatment of acute (short term,
curable conditions) medical conditions, in-patient tests, surgery,
hospital accommodation and nursing costs. Overseas cover, outpatient
tests and consultations with a specialist are sometimes covered.
Conditions you had before the insurance was taken out, cover for
long-term incurable illnesses, GP services and accident and emergency
admission are not usually included. A thorough assessment of your
own needs should thus be completed before any policy is taken out.
Why Look at Critical Illness Cover?
Critical illness cover has an increasingly vital role to play in
protecting the population from the effects of the reducing welfare
state. Unfortunately it is evident that for a large proportion of
those who do survive critical illnesses, a certain degree of disability
will result. This will of course affect the individual's ability
to work. If you are critically ill the last thing that you want is
to worry about losing your home because you can't afford to pay your
mortgage. Critical illness cover gives you peace of mind in these
circumstances.
What are Critical Illness Policies?
Critical illness policies usually pay a tax-free lump sum if you
suffer from one of the illnesses or conditions, or have one of the
surgical procedures, covered by the policy. A key features document
provided by the insurance company will outline what the policy covers
you for.
Which critical illnesses are covered by such a Policy?
Below are the most commonly occurring critical illnesses and thus
those most likely to be included in a policy of this type:
Heart Attack
Cancer
Kidney Failure
Major Organ Transplant
Coronary Artery By-Pass Surgery
Mobility
Multiple Sclerosis
This list is by no means exhaustive and insurance companies may
well cover other critical illnesses.
What is Permanent Health Insurance?
Permanent Health Insurance (PHI) essentially provides an income
for the insured if they are unable to work due to accident or sickness.
The benefit is not received as a lump sum, but as a regular form
of income. The benefit is limited to between 50% and 60% of the
individual's
average monthly earnings.The benefits continue until the Policy
expires, or the Insured returns to work or dies, whichever is the
earlier.
The benefits may differ depending upon whether you take the policy
out yourself or as part of an employer's group scheme. It is a
permanent policy and cannot be cancelled by the insurer before
the agreed date,
regardless of the number of claims made unless premiums are not
paid.
The tax treatment of the benefit differs depending on whether it
is your individual policy or your employer's. In the former,
the benefit is free of income and capital gains tax, but in the
latter the benefit is taxed as income.
How does PHI differ from Critical Illness Cover (CIC)?
Primarily in the type of claims that are made. The majority of claims
for PHI are as a result of depression/anxiety and such things as
back/muscular conditions or arthritis. These types of claims are
not covered by CIC, thus PHI cover is generally complementary to
CIC. Some providers may also offer an option for unemployment
cover.
Levels and bases of, and reliefs from, taxation are subject
to change.
Tax reliefs referred to are those currently applying and their value will
depend on the circumstances of the individual investor.
The Financial Services Authority does not regulate advice on private medical
insurance and some critical illness, permanent health insurance and long
term care contracts, although it does regulate the financial soundness
of insurance companies. |
Hedgelands Financial Services Ltd, Hedgelands, Abbotskerswell, Newton
Abbot, TQ12 5PW
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Telephone
0845
165 1280
General Insurance
0845 165 1281
Fax
01626 332622
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