WPA says this plan is the first multi-family healthcare plan. The concept is simple – extended families can, in effect, have a mini group policy for the whole family, offering significant savings overall.
For example, a policy could be taken out by grandparents to cover children and/or grandchildren or parents might cover their children and/or parents. Traditionally such cross-generational policies can fall foul of technical issues around insurable interest but, as the plan pays for treatment and there is no significant moral hazard risk, such issues should be of little concern to insurers. WPA only requires that members must be related by blood, marriage, civil partnership, cohabiting couples, adoption or fostering.
The plan has no age limits and switch, moratorium and full medical underwriting options are available. The plan offers three cover levels – Standard (with very limited outpatient limits), Enhanced (a £500 limit for specialist consultations and tests, and physiotherapy and other therapies) and Comprehensive (top level cover). Customers get a choice of where and by whom they are treated (there is no open referral option) and cover can vary between members too.
A family of five people, comprising a couple aged 73 and 72 living in Exeter, with a couple aged 47 and 46 in Reading and their 15 year old child could pay £4,026.86 a year for comprehensive cover each year with £500 shared responsibility (WPA’s co-payment system). Comparative cover with other insurers could cost almost twice as much WPA says.
What They Say
Managing director of private client business Rod Bramston said: “Multi-Family is reflecting the wishes of parents and grandparents to provide benefits for their children and grandchildren without necessarily involving a cash handout.”
What We Say
"Cross-generational opportunities have largely been ignored by insurers, so it is good to see WPA picking up the baton on this. Many families have one generation that is considerably better off than another and, increasingly, it is grandparents who are now in a situation to help their offspring. They could of course just pay them money, but that could mean little or no control over what the money is spent on. In theory such premium payments could have Inheritance Tax implications, but in practice premiums are likely to fall within one of the exemptions, so this is unlikely to be a major concern.
"Add in the cost savings of what could become recognised as ‘family group insurance’ and the plan could appeal to a lot of parents and grandparents.
"Looking more widely, this concept could open up PMI to new markets too. Older people are more likely to recognise the value of PMI, yet the sector needs more younger people coming through in order to achieve long term sustainability and best control over costs. So, for brokers, the plan is an opportunity to get to other generations of their clients more easily too.
"Finally, for many grandparents, the additional cost of insuring their kids or grandchildren is likely to be comparatively small relative to their own premiums – creating the impression of even greater value for money."