There may be other events you wish to protect against too.
Private medical insurance
Private medical insurance (PMI) pays for private health treatment. Depending on budget, you choose what you want covered – just in-patient or day-patient treatment, or out-patient consultations and tests too. PMI only pays for acute condition treatment – those that come on suddenly and can be cured. It does not cover chronic conditions and pre-existing conditions may be excluded.
Health cash plans
Health cash plans pay for everyday health costs, typically 75%-100% of costs for dentistry, optical and consultation costs, plus a small sum for each day spent in hospital, subject to an annual limit. Other dental options include capitation and maintenance plans, which are agreed with your dentist and cover likely costs over the next year. Dental insurance is also available. Plans may be subject to an initial waiting period to stop people taking out cover for known treatment, then cancelling.
Critical illness insurance
Critical illness insurance pays a lump sum on diagnosis of a specified illness. Over 30 conditions may be covered, including some forms of serious cancers, heart attack and stroke. It is often taken out to cover a mortgage and, because you are more likely to have a critical illness than die, is more expensive than life insurance.
Income protection
Income protection – sometimes called permanent health insurance – pays a weekly or monthly income if you cannot work because of illness or disability. You can insure up to around half your income. It pays after a waiting period on each claim, and can pay up to retirement age. It covers more conditions than critical illness insurance, but only if the condition stops you working. If you are not in paid work, you can get income protection on a limited basis.
Accident, sickness and unemployment insurance
Accident, sickness and unemployment (ASU) insurance is known as PPI (payment protection insurance) if used to cover credit or a loan, or Mortgage payment protection insurance (MPPI) to cover your mortgage. It pays monthly income for up to one or two years only if you cannot work because of illness, disability or unemployment. Some policies pay off any loan if you die. Policies usually last for the term of the loan or up to retirement age. Cover from lenders can be substantially more expensive.
Long-term care
By age 80, there is about a 1 in 5 chance of needing long-term care, which may cost £25,000 a year or more – situations vary and planning can be complex. You could qualify for some state/local authority help, but this is means-tested. It is possible to buy insurance in advance of needing care. Alternatively, you can wait and see if care becomes needed.
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