As the cost-of-living crisis deepens, many people across the UK are facing health and financial challenges.
Our recent research, 'Challenging Times: The health and financial fears of UK workers’, found that 81% of people have changed their spending habits in recent months because of the increased cost of living. We also discovered that some customers are cancelling insurance products to free up extra money.
However, the importance of private medical insurance and the peace of mind it can offer individuals and their families should not be underestimated, even at a time when disposable incomes are tightening.
So, when a client is considering cancelling an insurance product how can advisers help guide them through this decision?
Consider the alternatives
As the UK weathers the cost of living crisis, it’s understandable that many customers may view an insurance premium as a luxury they can no longer afford.
Some customers may drop their insurance and depend on the NHS for care. The NHS is an enduring institution and fulfils a need that private medical care is not aiming to compete with, only to support.
However, in a time of rising NHS waiting lists, customers should think carefully about whether they can afford to go without private cover. It’s not only about the speed of accessing care, but also about having a greater choice of where you will be treated and by who.
Some customers may also decide that a good way to save a small amount of money each month is to opt to self-pay for private healthcare if it’s needed.
However, the cost of a significant operation or treatment is beyond the reach of many people without them having to borrow money or rely heavily on savings. Choosing to risk a significant lump sum payment for treatment could be more of a financial risk than managing a monthly fee, particularly given that increasing numbers of people may already be having to dip into savings to maintain their standard of living as prices rise.
Customers may consider switching their private medical insurance to a new provider in the hope of making substantial savings on premiums. However, advisers are essential to this process to ensure that any new policy meets the client’s needs and to ensure quality of cover is not sacrificed for affordability.
Taking the wider view
For clients who have decided to self-pay, it’s also important that advisers highlight the wider benefits of a healthcare policy that they would now lose.
Firstly, a self-pay solution may only cover the immediate costs of an operation or a doctor’s appointment. Say, for example, a client has an operation where further physiotherapy is necessary; a health insurance product can offer end-to-end support without additional costs, whereas a client paying themselves could soon see unexpected bills rack up.
Clients also have access to a range of services to treat physical and mental illness, including physiotherapy and mental health support. We are all facing different pressures, whether financial, emotional, or mental, so having access to these services can provide vital support in times of need.
In addition, having access to remote GP services and medical consultations can help to spot, and treat, minor issues before they require more substantial – and if privately addressed, expensive – treatment.
And these additional services are widely used. In 2021, The Exeter’s Healthwise service saw its usage grow by 60%. Remote GP appointments were the most popular service, but we also recorded a 52% increase in the use of mental health services when compared to 2020.
Fixing the safety net
During the cost of living crisis, it’s understandable that clients may speak to their advisers with questions about where to cut expenses. However, those clients cutting health insurance policies may face difficulties further down the line.
If the aim is to help clients manage their finances to achieve their desired returns, then a regular premium is a safer bet than a large lump sum payment; especially at a time when the client is naturally worrying over their health more than their finances.
At times of economic pressure, people need more of a safety net, not less.