Health insurer shakes–up market with 'multi-family' offering
A leading health insurer is aiming to revolutionise the private medical insurance market by launching a 'multi family' product that allows one person to buy a policy for multiple family members.
WPA says its Multi-Family Healthcare Plan is the perfect opportunity for the 'Bank of Gran and Granddad' to use their accumulated wealth to pay for their extended family's healthcare.
It says baby-boomer grandparents give a total of £2.8 billion a year in cash to their grandchildren, fund one in four private school pupils, and are responsible for up to 35% of all childcare for families with working mums.
Prices are determined by where people live and their age, but the firm claims that by pooling family members together, the new policy is considerably cheaper than traditional health cover offered by rivals.
The policy can be extended to any family member as long as they are related by blood, marriage, civil partnership, adoption or fostering, or are a cohabiting couple.
According to HMRC rules, payments made out of after-tax income which don't affect standards of living, are normally exempt from inheritance tax – WPA says this means Multi-Family premiums could be exempt.
Rod Bramston, managing director of WPA's private client business, said: "This is about structuring family finances effectively. Grandparents now play a crucial role underlining a growing shift in family funding with potential tax advantages."
Graeme Godfrey, director at bestgoprivate.co.uk – an independent PMI specialist – said the product was "innovative" and will attract people who had never previously considered private medical insurance.
He said: "WPA is well known for excellent service and I feel that this innovative product will help grow the market where perhaps some family members may have not opted for PMI cover. Currently, independent brokers will research the market and select an insurer specifically for the needs of the customer where different members of a family may be insured by a combination of insurers.
"It will be interesting to see if WPA remains competitive over the medium term (2-5 years), as their comparison on cover and premiums has been made against insurers who offer a No Claims Discount, and WPA offer their own discounts too.
"In a competitive marketplace more choice for the consumer can only be a good thing."
Private medical insurance
PMI allows you to skip the NHS waiting list and arrange treatment at a time you choose. With most PMI policies, you pay a monthly premium (the older you are, generally the higher premium) and the policy will then pay out, up to specified cover limits and after an agreed excess, for any treatment you might need. Not all conditions are covered by PMI and you get what you pay for: the more cover you want, the higher your premium will be.
The tax levied on the total value of your estate after you die. IHT has to be paid by the beneficiaries of your estate before they can receive any of the money from it. The money can’t be taken from the value of the estate _– it has to be paid before any money can be released. There is an IHT threshold – known as the “nil-rate band” – below which no tax is levied (£325,000 in 2011/12). Any amount above the nil-rate band is subject to tax at 40%. If your estate totals £600,000, there is no tax on the first £325,000; however your estate will pay 40% tax on the remaining £275,000, a total of £110,000. Prudent tax planning can reduce your IHT liability, so always consult a specialist solicitor.