9: Other Insurance Based Policies Pt. 1

Question 1

What are most policy exclusions in personal accident and sickness insurance (PAS) designed to avoid covering?

Answer 1

Deliberate or reckless behaviour causing harm, or pre-existing conditions.

Question 2

What does a Personal Accident and Sickness (PAS) policy cover?

Answer 2

Accidents or time off work due to sickness.

Question 3

Are PAS policies usually annual or long-term?

Answer 3

Usually annual, but can be tailored to specific short terms like holidays or business trips.

Question 4

Can PAS policies be standalone or combined with other cover?

Answer 4

Yes – they can be standalone or added as a bolt-on to other insurance products.

Question 5

What are typical benefits covered under a PAS policy?

Answer 5

Death, permanent disablement, and loss of limbs, eyes, or digits.

Question 6

What are the two additional benefits often included in PAS policies?

Answer 6

Medical expense refunds and weekly sickness benefit.

Question 7

What is the usual deferred period for weekly sickness benefit under PAS?

Answer 7

Around 4 weeks.

Question 8

For how long are PAS benefits typically paid?

Answer 8

Usually up to a maximum of 104 weeks (2 years).

Question 9

Are PAS benefits typically based on earnings?

Answer 9

No – they are usually a fixed sum and not linked to earnings. But group PAS might be linked to earnings.

Question 10

What distinguishes Group PAS cover from individual PAS?

Answer 10

It may be restricted to activities specific to the employer’s business.

Question 11

Can PAS be offered by employers?

Answer 11

Yes – employer-provided PAS policies can exist.

Question 12

How are benefits usually structured in employer-provided PAS policies?

Answer 12

They may be linked to salary rather than fixed sums.

Question 13

Is there tax relief on premiums paid for PAS policies by individuals?

Answer 13

No – there is no tax relief.

Question 14

Are benefits from PAS policies taxed if the individual pays the premiums?

Answer 14

No – benefits are tax-free to the individual.

Question 15

How are PAS benefits treated if the policy is paid by the employer?

Answer 15

They are a benefit in kind and subject to income tax.

Question 16

Why might someone choose PAS over Income Protection (IP)?

Answer 16

It is more widely marketed and generally cheaper. However it’s not as comprehensive so ideally should not be a substitute!

Question 17

What are the key differences between acute and chronic conditions, and which does PMI primarily cover?

Answer 17

Acute conditions have rapid onset and are usually curable with short treatment.

Chronic conditions are long-lasting, usually incurable.

PMI mainly covers acute conditions needing speedy treatment; chronic conditions are better suited for long-term care insurance (LTCI), though PMI usually covers initial diagnosis.

Question 18

Does PMI cover Accident & Emergency (A&E) treatment? Why or why not?

Answer 18

No, A&E treatment is usually excluded because few private hospitals are equipped for emergency care.

Question 19

What are the four principles of the ABI Statement of Best Practice for PMI sales?

Answer 19

1. Use ABI common definitions in policies.
2. Provide all mandated information to customers.
3. Explain core terms, conditions, and exclusions clearly.
4. Provide specific info at point of sale, including consumer guides and details on underwriting, chronic conditions, cancer, and drug treatment.

Question 20

Are all cancer treatments covered under PMI?

Answer 20

No. Experimental treatments or drugs not licensed in Europe or approved by NICE are often excluded or only partially covered.

Question 21

How do PMI providers assist customers with cancer claims?

Answer 21

Specially-trained cancer nurses or claims staff.

Question 22

What customer information is mandatory at point of sale according to the ABI?

Answer 22

1. ABI consumer guide
2. Underwriting options
3. PMI cover for chronic conditions
4. cancer cover in a distinct section
5. Explanation of drug treatment cover.

Question 23

Some insurers now adopt an ‘open referral’ system with PMI, what is this?

Answer 23

Patient’s GP refers the patient to a specialist but does not specify which specialist or hospital. Insurer chooses.

Question 24

Do most Private Medical Insurance (PMI) policies cover treatment received abroad?

Answer 24

Most restricted to UK residents and don’t provide cover abroad.

Question 25

What are the main features of a basic PMI policy?

Answer 25

Low costs No extra benefits Limits on certain cover (usually only get accommodation, drugs, dressings, and doctor's fees.

Question 26

Psychiatric cover is more likely to be included on which type of PMI policy?

Answer 26

Standard and comprehensive, not basic

Question 27

With PMI, what is the difference between an excess and a co-payment, and what is the effect on the premium costs?

Answer 27

Excess: You pay the first set amount per claim or year, then insurer pays 100%. Higher premium. Co-payment: You share the cost of every claim (e.g., pay a %), insurer pays the rest. Lower premium.

Question 28

Name some exclusions on a PMI policy

Answer 28

Substance misuse: Treatment related to alcohol, drugs, or other substances Chronic and long-term conditions: Including incurable illnesses and extended rehabilitation Non-essential procedures: Cosmetic surgery, gender confirmation, and routine check-ups Self-inflicted harm: Including attempted suicide and intentional injuries Reproductive-related exclusions: Normal pregnancy, childbirth, and termination Specific conditions: HIV/AIDS, kidney dialysis, sleep apnoea High-risk scenarios: War-related injuries and dangerous sports Treatment abroad: Usually excluded unless specified Organ transplants: Generally not covered

Question 29

PMI cover can be arranged as a single policy, and what 3 other options?

Answer 29

Joint Single parent (parent and child(ren) Family (two adults, child(ren) Kids have to be dependent (below 21 living at home or in full time education up to 25)

Question 30

When might reduced underwriting be offered in setting up a group PMI policy?

Answer 30

Groups of more than 20–50

Question 31

Are employer-paid premiums for private medical insurance subject to National Insurance contributions (NICs)?

Answer 31

Yes, they are subject to employer NICs, but not employee NICs.

Question 32

Can employers claim tax relief on private medical insurance premiums paid for employees?

Answer 32

Yes, the premiums are treated as a deductible business expense for corporation tax purposes.

Question 33

Are employees taxed on private medical insurance premiums paid by their employer?

Answer 33

Yes, employees pay income tax on the premiums as they are treated as a benefit in kind.

Question 34

What are the three main types of PMI plans?

Answer 34

Basic, standard, and comprehensive

Question 35

Individual PMI contracts can be fully underwritten or accepted without medical information subject to a moratorium. What does this mean?

Answer 35

Medical conditions that an individual has had in the previous five years before the start of the policy are excluded for a period of e.g. two years. The individual must have remained free of treatment for two full years.

Question 36

What is a 5/2/2 rolling moratorium?

Answer 36

Exclude medical conditions last 5 years Exclude them for next 2 years If you complete that 2 years without needing treatment for it, they will then accept cover

Question 37

Who receives the payment of a PMI claim?

Answer 37

Usually the hospital or doctor

Question 38

Are PMI benefits (e.g. treatment paid for by the insurer) taxable for the employee?

Answer 38

No, PMI benefits are tax-free for the employee.

Question 39

Do employees get tax relief on PMI premiums they pay themselves?

Answer 39

No, there is no tax relief for employees on personally paid premiums.

Question 40

What are the tax implications if an employer pays the PMI premiums?

Answer 40

It is treated as a benefit in kind, so the employee pays income tax on it. The employer pays NICs on the premiums. The employer can deduct the premiums as a business expense for corporation tax.

Question 41

How are PMI premiums usually paid?

Answer 41

Annually.