MEDICAL INSURANCE

I want to cover myself against losing income in case I fall ill and cannot get to work. What is the best UK medical insurance policy to enable me to do this?

The type of policy you need is permanent health insurance (PHI), otherwise known as income replacement insurance, income protection insurance and long-term disability insurance. If you are a man aged between 40 and 64 then it is something you should consider seriously as more than 700,000 men between these ages are off work for more than six months each year because of illness. It is worth emphasising here that the State will not cover your lost income to any adequate degree. The cover is called permanent health insurance because the insurer cannot cancel the policy no matter how many times you claim on it, although they usually lapse at age 65.

How does PHI work and how often does it pay out?

PHI pays a regular income designed to protect your standard of living if you suffer long-term illness or injury. Your payments usually begin after an initial interim period of four, 13, 26 or 52 weeks and is payable until you get back to work, die or the term of the policy expires. A longer waiting period for the policy to pay out will mean lower premiums. Benefits are around 50% to 60% of your gross income, plus State benefits. To trigger payments you should be able to show that you are unable to follow your usual occupation because of your problem.

How do I get the best PHI cover on the market?

It is best to speak to an independent financial adviser (IFA) if you are taking out PHI because policies differ widely and are tailored to your individual circumstances, so you need to be sure that you have got the best cover available. Some employers offer PHI to their workers, so make sure you are covered by it if this is the case.

What is critical illness cover?

Critical illness cover – or dread disease cover as it is often called – pays out on the diagnosis of seven specified critical illnesses – cancer, coronary artery bypass, heart attack, kidney failure, major organ transplant, multiple sclerosis and stroke. The insurance pays a tax-free lump sum if you become ill or seriously disabled by any of these conditions.

What are the exclusions on critical illness cover?

Policies will not generally cover less advanced forms of prostate cancer, non-invasive skin cancers and cardiac conditions like angina. You should check policies very carefully before you sign up to one and it is wise to consult a financial adviser to go through the small print. Bear in mind that for single people with no dependants, critical illness cover is more important than life insurance as you will have fewer bills to worry about or a lump sum to cushion the blow if you become gravely ill.
I am 25 and would like to take out critical illness cover. Is this possible at such a young age?

Yes, of course, as the diseases and conditions covered are no respecters of youth and apparent fitness. Indeed, cancer and heart attacks affect one in four women and one in five men before retirement age. Most insurers will allow you to take out critical illness cover between the ages of 17 and 70 and it can be specified number of years – the term of your mortgage, for example. Don’t forget that you will have to complete a proposal form, which will ask detailed questions about your own and your family’s health history.

What are the best critical illness policies on the market at the moment?

There are over 200 critical illness plans on the market from more than 60 insurers. It is vital you get the correct cover and to help you get this you should consult an IFA with a good knowledge of the market. As a general guideline, do not go for polices that seem to offer protection against all the world’s dread diseases – only the seven specified above.

Is private health insurance the same as permanent health insurance?

No, it is not, and we won’t use the abbreviations as they both turn into PHI, just to make it even more confusing. Private health insurance basically provides cover for the cost of private medical treatment for curable, short-term medical conditions and does not act as an income replacement. In short, you jump often long NHS queues for treatment for minor, non-life threatening conditions. If you are happy to do this then private health insurance could be the cover for you.

What is the cost of private health insurance, as I am thinking seriously of taking out a policy?

It depends completely on what sort of plan you choose and whether or not you put family members on the policy. Also, you may fancy being treated in a top local hospital, or even a prestigious London training hospital like Bart’s, and although there are policies where you can specify these sorts of terms they tend to be more expensive than the more standard cover. Otherwise, you could take out a Budget policy, which would only apply if the treatment you want is not available on the NHS within a set period.

How do I go about claiming on private health insurance?

Your GP will confirm that you need treatment and will organise a private appointment with a consultant to obtain an expert assessment of the extent of the problem and what the treatment will cost. You then contact your insurer and confirm that it will pay all the costs of the treatment. It is wise not to begin any treatment until you have settled this beyond dispute. Some insurers will settle the bills directly with the hospital and some require you to pay and then will refund you. Make sure you know what method your insurer uses and that you are happy with it.

LIFE INSURANCE
I spend quite enough of my hard-earned money each month. Why should I bother with life insurance?

Because if you do not take it out, and you die, your loved ones will probably struggle financially. If we called this cover what it should really be called – death insurance – and promoted its real function more enthusiasm – doubtless a lot more people would have cover.

What is term life insurance?

This is temporary life insurance and will pay out if you die within a specified period. If you live to the end of the policy’s term there is no payout. You set the term of the cover, which can range from a few years to several decades. Term insurance is dearer for men, because they do not on average live as long as women. Smokers pay more again.

What types of term life insurance can I take out?

There are two basic types of term life insurance – level term and decreasing term. Level term means the policy pays out on death and remains at a set level throughout the term of the cover. This type of life insurance is often taken out with an interest-only mortgage, where the capital debt stays the same for the mortgage term. Decreasing term means the possible payout falls each year, until it is zero at the end of the term. This is often used with a repayment mortgage, where the mortgage debt decreases through the years.

I’ve heard of ‘whole-of-life’ life insurance. What is this exactly?

This is life insurance cover where the policy guarantees to pay out the sum assured on death, whenever it occurs, which is why it is also known as guaranteed insurance. Premiums tend to be more expensive than with level and decreasing term cover because the insurer will have to pay out at some point. Whole-of-life policies are based on investment funds and some of the units in your fund are cashed each month to pay for your cover.

What is the best life insurance cover for me to buy?

This depends entirely on your circumstances and you should consult an independent financial adviser (IFA) to make sure you get the best deal. However, as a rule of thumb, it is probably best to avoid policies that offer ‘incentives’ (like free gifts or a few months’ cover to begin with) and go for something that will give you peace of mind in the long term.

PET INSURANCE
I have a dog and two cats, but is it really worth getting pet insurance for them as I’m on a tight budget?

Point taken, but consider this. One vet quotes £568.50 for treating a cat with skin problems; £1333.76 for a cat with a fractured pelvis (a common injury if they are hit by a car, for example), and £3,287.14 for a dog with a tumour. If you’re really unlucky and one of your cats gets skin problems, the other sustains a fractured pelvis and the dog contracts cancer, then you’re looking at more than £5,000 for starters. How does that fit in with your tight budget? It’s probably time to compare pet insurance.

I’ve been told that if a motorist swerves to avoid my dog in the road and hits a wall, then I could be liable for all the damages. Is that true?

Yes, it is. You could end up forking out for the wall, the car and any injuries sustained by the motorist if a court finds you liable for the dog’s behaviour. The same goes for a dog snapping at a postman or worrying sheep, so why not compare pet insurance now and get some useful legal advice and cover for legal fees in case Fido decides to take a lump out of the meter reader. And if he is that way inclined, some policies even cover the costs of visiting an animal behaviourist.

My cat went missing recently and I had some notices printed asking people to look out for him and offering a reward for his safe return. Would that have been covered by pet insurance?

Almost certainly, although you need to compare pet insurance carefully and make sure that this is covered by any particular policy. Pet insurance does not only pay out for diseases and visits to the vet. Some pay for kennelling if you have to go to hospital, for example, while other plans pay out the purchase price of your pet if it dies or is stolen. The breadth of cover varies, so check out and compare pet insurance today – but rest assured that the cost of printing reward notices is covered by many policies.

I need pet insurance for my German Shepherd. How do the insurance companies work out the premiums for any particular breed?

This is a good question. As with a lot of the insurance we look at on this website, the type of product (or pet in this case) and your postcode mean a lot when it comes to working out the costs. Dogs certainly cost more than cats to cover and you may have to pay extra for larger dogs like yours, although delicate, expensive breeds like Pekinese may cost more with some insurers. The postcode is also important, and becoming more so, with premiums tending to be higher if you live in a city – mainly because vets’ fees are higher in cities and there is a perception that more things can happen to your pet in a city that might need remedy. To make a comparison with motor insurance, this is the equivalent of keeping a car parked on the street in an inner city neighbourhood. However, you should be aware that some companies do not charge more because of postcode location.

I have inherited a 10-year-old cat from a relative, but the insurance companies don’t want to know about covering him. Surely this can’t be right?

Unfortunately, the insurance companies tend to apply a cut-off age and this is generally eight for dogs and 10 for cats. But keep searching and compare pet insurance carefully because some pet insurers do not apply age limits. And, as we all know, some cats go on happily into their twenties.

My dog has had a terrible year with illnesses and accidents and now my pet insurer is refusing to pay out any more for the vet’s bills. Can it do this?

Yes it can. Some insurers set a maximum limit on what they are prepared to pay out on any one policy, while others pay out a maximum amount per claim. You should compare pet insurance carefully as this could make a big difference in some cases. You have almost certainly exceeded the limit with your dog and, unfortunately, you now have to pay for its treatment by having done so.

Is there a ‘bad’ time for pets when they are more at risk than others?

Surprisingly there is – and that is the summer, especially the super-hot, globally warmed summers we get now in the UK. Put simply, animals used to cool temperate climates do not like the heat and tend to become ill in prolonged hot spells. Also, infestations by fleas and ticks are far more common in the summer and these can be quite expensive to treat as the chemicals you need are priced at a premium. You should get pet insurance for your animals in any case, but it is probably more of a priority in the summer.
All I ever hear when pet insurance is discussed is cats and dogs stuff. I like to keep exotic pets like lizards and snakes, so can I get cover for them?

Certainly and there are specialist brokers that will cover ‘non-standard’ pets. Broker PHA Insurance (phapet.com) covers birds, reptiles and rodents, as will Brooks Braithwaite (brooksbraithwaite.com), a company specialising in insurance for kennels and catteries. A bird worth £500, for example, can be covered for theft, death and vet’s bills for up to £1,500. So if you are an exotic pet owner, don’t despair. There’s a policy for you too.

What does ‘lifetime cover’ mean in relation to pet insurance policies?

Long-term conditions like arthritis and diabetes can mean treatment is required by your pet for many years. Some pet insurance companies offer ‘lifetime cover’ to cover the costs of these illnesses and it is worth your while to research the best pet insurance for your particular needs, especially if your pet has a long-term medical condition.

If I have to make a claim on my pet insurance do I pay the vet first or will the insurance company pay them?

Many pet insurers offer both options and it can be useful for the insurer to pay the vet directly if you are on a strict budget and cash is tight. You must check that your policy offers this option, however, as some will only pay out on submission of a settled vet’s bill. As ever, you should look for the best pet insurance for your particular needs.

HOME INSURANCE

I am a first-time homebuyer and have been told I have to take out building and home contents insurance to complete my purchase. Do I really have to do this, as there are a lot of other demands on my money?

Yes, you do, and the building insurance is a compulsory element if you are taking out a mortgage. How do you think you will be able to pay for the cost of rebuilding if the worst happens, for example? You may think this highly unlikely, but so in all likelihood did the people in Kensal Rise, London, whose homes were devastated by a tornado in 2006. Content insurance is not a requirement, but it is certainly most advisable. Losing your valuables in a burglary, for example, is a bad experience at any time and to lose financially by it as well just makes things worse.

Who decides how much my home is worth if it needs to be rebuilt and what level of cover do I need to be safe?

Your home will be protected to the extent of the ‘sum insured’ and this is the maximum the insurer will pay if the policy is claimed upon. A chartered surveyor – a member of the Royal Institution of Chartered Surveyors (RICS) – will give you a professional rebuilding cost for the purposes of this insurance. When you compare building insurance, be aware that some insurers offer unlimited cover.

What is the excess on my building and content insurance?

Insurers will usually insist on you meeting the first part of any claim – whether it is travel insurance, car insurance or building insurance. The excess will vary from insurer to insurer (it’s usually £50-£100), so make sure you know what it is when you investigate which building and content insurance policies you are going to take out.

I live in a flat in inner London and recently got some quotes for content insurance. This was way above what I paid when I lived in Dorset, although the value of my contents is just the same, so what is going on?

Dorset, a predominantly rural county, is one of the least crime-ridden areas of England. London is one of the most crime-ridden areas, so there is your answer. Like motor insurance, your contents cover is extremely postcode-sensitive and is one of the additional costs of capital living.

I live in a rented flat and want to insure my personal belongings there but not the landlord’s furniture and other possessions. Is this possible?

Yes it is and you can buy tenant’s content insurance to cover just your own property, although there are minimum levels for the amount you cover your goods for – typically, about £8,000, although some insurers only start cover in the £12,000-£15,000 region. Landlords, of course, can (and perhaps should) take out their own cover to protect their property in rented accommodation. They will also provide the buildings insurance, so you need not worry about that.

Our area has suffered abnormally high rainfall recently and some local rivers have been put on flood alert. Does my household insurance cover flooding?

It’s up to you to check that your building and content insurance policy covers flooding, but you have brought up a very good point. The winter of 2006-07 has been exceptionally wet after a couple of years of drought and many people seem to have forgotten about flood cover. You should check that your home insurance UK is current and paid up to date and that it will cover the reasonable cost of alternative accommodation if your home is rendered uninhabitable, as well as damage and repair costs. Check to see if there any exclusions in the event of flood damage and the amount of excess you have to pay (see Excess question above). If it’s too high then compare home contents insurance and buy a policy that suits you better.

My home actually did suffer a flood yet I was refused a payout because the insurance company said I hadn’t maintained my property properly. Is that right?

Unfortunately for you, yes, the insurer is within its rights. If you do not maintain your property regularly and keep it in good repair then insurers will query and possibly reject claims. The onus is on you to make sure you keep the property in good repair and your insurance policies up to date.

I badly damaged a wall while working in our bathroom and have been told by a professional builder that repair work is necessary. Am I covered for this with my home insurance?

Not as a matter of course, as insurers that do cover DIY blunders quite understandably charge more for their policies. You will have to check that this is part of your protection and the message here is (again) check your policy for exactly what is covered or suffer the consequences.

I’m always hearing about exclusions on home insurance policies. What are these and are they just another insurance company con?

No, they’re not a con and no insurance company will pay out on every single claim or type of claim. Common exclusions on buildings insurance include frost damage, storm damage to fences and gates and damage caused by aircraft sonic booms. When you are choosing a policy check carefully for what the exclusions are.

What is subsidence and can I insure against it?

Subsidence occurs during droughts when the soil (typically clay) dries out, contracts and puts pressure on your home from the foundations up. Nearby trees can worsen the problem as they take more water from the soil. The tell-tale signs are cracks in walls and doors that suddenly don’t close properly or do not sit in their frames dead straight. You can insure against subsidence but if your home is in an area prone to the problem then it will cost you more to arrange cover for your property.

DENTAL INSURANCE

I am insured for everything else so why should I bother about covering my teeth with dental insurance? Surely the NHS will look after them?

Not necessarily. In 2006, to make it ‘easier’ to access NHS dental treatment, a new dental contract and fees structure was introduced. Because this new structure requires changes to working practices, 10% of the UK’s 21,000 dentists refused to sign it. The expectation is that more will opt out of the NHS and only perform private work. It is estimated that around 1 million people in the UK have lost their dentist already, so these people may actively be considering dental insurance to protect them. Dental insurance provider HSA also estimates that 26% of people – around 12 million – have struggled to find an NHS dentist. More worryingly, around 62% of people think that NHS dentists will disappear altogether soon.

I want to take out dental insurance, so how much will it cost?

Premiums are usually calculated on the basis of your age but they can vary widely and, as with any other type of insurance, you should shop around for dental insurance to make sure you get the best deal. You should also remember that there are two types of basic plan that will cover your teeth – dental plans, designed to cover all your dental needs from check-ups to major work – and health cash plans which cover everyday healthcare items including dentistry. These are available from as little as £1 a week and dental cover in the range of 50% to 75% is typically provided.

Can I claim the full cost of treatment with dental insurance and will I get all the costs of my treatment back?

Dental policies often will not pay the full cost of treatment and most policies set maximum payout levels in any 12-month period. Some will only pay up to 75% of the cost of your treatment, although a very few plans do enable you to claim 100% back. Also note that you will normally have to sign up to the policy three to six months before you can make a claim but, as ever, this can vary and you should carefully check the terms and conditions of the dental insurance policy you buy.

What sort of work is covered by dental insurance?

Most treatments from routine regular checkups to major repair work in the event of an accident are covered. Dental insurance also covers root canal work, bridges, crowns, dentures and other laboratory work up to the maximum limits stipulated in your policy. Plans may be broken down into the types of work they cover – checkups and visits to a hygienist, treatment for work such as fillings and crowns and so on.

I am thinking of improving the appearance of my teeth with cosmetic work on them. Should I take out dental insurance to cover the cost of the work?

No, because cosmetic work and orthodontic treatment like braces and implants are not covered by dental insurance. You should also note that treatment of conditions such as oral cancer, salivary glands and serious dental abscesses are not covered either.
I have heard of capitation plans in connection with dental insurance. What are these exactly?
Capitation plans are offered by individual surgeries to help you improve your dental health by encouraging you to visit the dentist at regular intervals. Your teeth are assessed by a dentist and after a check of your dental history they will set a monthly payment. Routine dental work is covered by this, although laboratory fees, orthodontic work, cosmetic treatment and prescriptions will not be. These are only available through participating dentists.

What are maintenance plans? Are they worthwhile?

You could opt for a maintenance plan – again, offered by individual surgeries – that covers the costs of the basics of routine dental care like checkups, X-rays and sessions with the hygienist. Most will also cover some accident and emergency work. As they cover a fairly standard set of dental treatments the fee is usually the same for all patients at a particular surgery.

I have taken out travel insurance and was wondering if dental cover was included?

It may well be, but it is up to you to check that this is part of the cover. Some travel insurance and medical insurance policies offer dental treatment cover but only in an accident or emergency – so routine ongoing cover will not be a feature of this insurance. As ever with insurance, you need to check the details of your cover thoroughly to see what is and what is not covered by the terms of the policy.

Will I be covered for dental injuries with dental insurance?

Most policies will cover emergency in- and out-patient treatment where an injury has been caused by an external blow to the face, teeth or jaw. While you will probably be able to receive this treatment from the NHS, taking out insurance should mean you will be able to avoid the inevitably long waiting lists. This is important as immediate treatment gives the best possible chance of saving a tooth.

I need to have my wisdom teeth removed. Will dental insurance cover me for the costs of this work?

A surprisingly large number of people ask about this treatment on dental insurance policies and it should be covered under the ‘extractions’ clause in your policy. It makes good sense to check the details of your policy if this is the treatment that you need.

CAR INSURANCE
What are the types of car insurance I can have?

You can have Third Party cover, Third Party, Fire and Theft or Fully Comprehensive, but whichever one you choose you should compare car insurance first. The latter is the most expensive and covers all eventualities – the costs of any injuries sustained in an accident, damage to your and others’ cars and property. Third Party is the cheapest motor cover, covering damage to the other party’s car and compensation, but NOT your own car if it is stolen or burnt out. Fire and Theft added to Third Party cover does exactly what it says on the tin.

I’m a 23-year-old man, live in inner London, and want to buy a very nippy Subaru Impreza. What’s the best car insurance for me?

Good luck, because the odds of you finding cheap cover, even if you do carefully compare car insurance, are stacked against you. All insurers have basically similar ways of calculating premiums and the type of car, your place of residence, gender and age are the biggest factors. Unfortunately, with this car, you will come into the top price brackets in all these categories. 

What is a no claims bonus and how do I get one?

This is basically a reward from the insurance company for not making a claim from year to year. You may get a 30% discount after a year of trouble-free driving, going up to 65%-70%, while companies dealing with younger drivers may award better discounts at an earlier stage. Many insurance companies now allow you to protect your no claims bonus by paying a slightly higher premium, but it’s always best to compare car insurance to get the terms and conditions you want.

I’ve heard that if your car is a write-off you may not always get back what you paid for it. Is this true?

Unfortunately it is true, no matter how carefully you compare car insurance policies. You may have had a good car and kept it in excellent condition, but the amount you get as a payoff for losing it (either by having it stolen, burnt out or written off in an accident) will almost always be below what you paid for it and will not allow you to buy an exactly equivalent model as a replacement. This is mainly because of the very rapid rate at which car prices depreciate once the vehicle is out on the road. If you are in this situation, you should consult Glass’s Guide – one of the definitive car buyers’ guides – and if the price of your make and model of car is what the insurance company is offering as the payout then that is what you are stuck with.

If someone crashes into me and they are not insured, what happens next?

In this case you should contact the Motor Insurers’ Bureau on 01908 830001 (email: Enquiries@MIB.org.uk ), the organisation financed by a levy on all the insurance companies and set up to compensate people who would otherwise lose out through no fault of their own. Your case will be considered on its merits and you shouldn’t lose out if the circumstances are as you have related them.
Is breakdown over the same as motor insurance?

No it isn’t, but it is still a very useful cover to have. If you break down and get stuck at the side of the road you might be grateful for this kind of car insurance UK. There are four main types of cover – roadside rescue, roadside rescue and home rescue, roadside rescue and recovery plus and European rescue. The levels of cover are pretty self-explanatory and with recovery plus you get a hire car to return home or continue your journey, or the cost of alternative transport or accommodation in a local hotel while awaiting completion of repairs. As ever, compare car insurance of the breakdown variety carefully and get the policy that suits you best.

I’m taking my car abroad for the family holiday this year. Will my insurance cover the trip?

You must check with your insurer that this is all right but in most cases it will be, as long as you are not planning to be away for more than 30 days. For longer periods than this getting car insurance cover can be a pain and some countries will insist on you having a policy tailored to their motoring regulations. As ever, check carefully what the requirements are before you set out.

I want to buy a 4×4, but know that drivers of these vehicles are discriminated against. Does this mean dearer car insurance?

It’s true to say that 4×4s have attracted criticism recently for lots of reasons and that their drivers aren’t the most popular motorists on the road. But for the most part insurers treat the vehicles as normal cars (very few are driven off-road, their original use), although because they are big, heavy and expensive they tend to attract higher premiums. If you do drive off-road, you will need a different category of UK motor insurance and should compare car insurance and shop around in the normal way.
I am a real sports car fan and will be buying my first Porsche soon. Will I be hammered on the insurance?

Sports cars do attract higher car insurance premiums purely because they are built for speed and the insurers have statistical evidence that their drivers take more risks and are involved in more frequent and more serious accidents than mainstream motorists. Of course, the cost of your car insurance will decrease the older you get and the more no claims discounts you build up. Also bear in mind that sports cars are more likely to provoke envy and resentment amongst people who cannot afford them. A favourite ploy is to ‘key’ them (run a key along the paintwork), which again hikes the car insurance costs.

As a woman will I be charged less for my car insurance?

As a rule, yes, you will be charged less. Again, insurance companies build up detailed statistics on what they have to pay out on. They have found that although women are involved in similar numbers of accidents they are usually less severe than those involving men as they are driving more slowly. There are women-only insurers in the market but, as ever, it would be worthwhile to compare car insurance.