The Pros and Cons of Cash Plans
Around 4 million people in the UK currently have a cash plan; this compares to around 6.7 million people with private health insurance. So what exactly do cash plans do and what can we gain?
Most cash plans include the ‘core benefits' of dental and optical allowances in addition to a hospital stay benefit whereby you may be eligible to claim a set benefit per night spent in hospital. Many cash plans now also include a benefit for private therapies such as physiotherapy and osteopathy; some cash plans also include alternative therapies such as homeopathy and acupuncture. A selection of plans on the market also boast extra benefits such as specialist consultations, scans, health screening and cancer drugs. One health insurer, Western Provident Association (WPA) has recently launched a plan including a benefit for NHS car parking fees, a benefit not provided by health insurers previously.
Essentially, cash plans are designed to provide a cash benefit for charges outside of NHS cover, or to top up NHS treatment. Sounds like a good idea, but what are the pros and cons?
- Starting with the positives, it is evident that this type of cover provides a ‘peace of mind' plan you can fall back on when costs are incurred outside of the NHS. Many people do not budget for having to pay £200 for a new pair of glasses, or £150 for a couple of fillings; a cash plan means you are able to budget for the premiums while having the peace of mind that you have cover in place when needed.
- The premiums for cash plans are also relatively low cost, often between £10-£30 per month.
- In addition to the low premiums, children can often be added to the plan free of charge or at reduced rates.
- Many cash plans can be flexible in the cover provided, often allowing you to tailor the plan to meet your needs and budget.
- Unlike private medical insurance, there is usually no need to complete full medical underwriting; this means buying a cash plan is a very simple and easy process.
Still sounding good? Maybe so, but there are limitations and restrictions to cash plans:
- First off – cash plans are not private medical insurance (PMI). Many people can confuse the two, but PMI is a comprehensive alternative to the NHS, cash plans exist the supplement the NHS.
- Qualifying periods apply on the majority of cash plans which means you cannot claim for particular benefits until this period has ceased. A typical qualifying period might be a month or three months.
- Cash plans can only provide a limited level of cover, for example most plans might provide a maximum benefit of around £150 per year for optical care. This means although cash plans top up the gaps in the NHS, sometimes only part of the additional costs can be met with a cash plan.
- As with most types of insurance, cash plans are a calculation of risk. Although the plans provide benefit for common costs, it may be that the premiums outweigh the claims made; therefore not necessarily providing good value for money.
- Some plans can be confusing – if you are planning on buying a cash plan, investigate the benefits/limitations and also the company providing the cover. A plan with low premiums and high benefits is of no use without the service to back it up.
- Additional monthly/annual premiums may not be a viable option for many families; hence the low uptake of cash plans in the UK.
With only 7% of the UK population currently being cash plan owners, it would seem that cash plans are a solid investment, but only when it is an affordable option, even then the right plan should be sought to ensure value for money. With public spending cuts starting to hit home and the NHS being under scrutiny, now may be the time when cash plans are seen less as an affordable luxury, and more of an essential commodity.
Most cash plans include the ‘core benefits' of dental and optical allowances in addition to a hospital stay benefit whereby you may be eligible to claim a set benefit per night spent in hospital. Many cash plans now also include a benefit for private therapies such as physiotherapy and osteopathy; some cash plans also include alternative therapies such as homeopathy and acupuncture. A selection of plans on the market also boast extra benefits such as specialist consultations, scans, health screening and cancer drugs. One health insurer, Western Provident Association (WPA) has recently launched a plan including a benefit for NHS car parking fees, a benefit not provided by health insurers previously.
Essentially, cash plans are designed to provide a cash benefit for charges outside of NHS cover, or to top up NHS treatment. Sounds like a good idea, but what are the pros and cons?
- Starting with the positives, it is evident that this type of cover provides a ‘peace of mind' plan you can fall back on when costs are incurred outside of the NHS. Many people do not budget for having to pay £200 for a new pair of glasses, or £150 for a couple of fillings; a cash plan means you are able to budget for the premiums while having the peace of mind that you have cover in place when needed.
- The premiums for cash plans are also relatively low cost, often between £10-£30 per month.
- In addition to the low premiums, children can often be added to the plan free of charge or at reduced rates.
- Many cash plans can be flexible in the cover provided, often allowing you to tailor the plan to meet your needs and budget.
- Unlike private medical insurance, there is usually no need to complete full medical underwriting; this means buying a cash plan is a very simple and easy process.
Still sounding good? Maybe so, but there are limitations and restrictions to cash plans:
- First off – cash plans are not private medical insurance (PMI). Many people can confuse the two, but PMI is a comprehensive alternative to the NHS, cash plans exist the supplement the NHS.
- Qualifying periods apply on the majority of cash plans which means you cannot claim for particular benefits until this period has ceased. A typical qualifying period might be a month or three months.
- Cash plans can only provide a limited level of cover, for example most plans might provide a maximum benefit of around £150 per year for optical care. This means although cash plans top up the gaps in the NHS, sometimes only part of the additional costs can be met with a cash plan.
- As with most types of insurance, cash plans are a calculation of risk. Although the plans provide benefit for common costs, it may be that the premiums outweigh the claims made; therefore not necessarily providing good value for money.
- Some plans can be confusing – if you are planning on buying a cash plan, investigate the benefits/limitations and also the company providing the cover. A plan with low premiums and high benefits is of no use without the service to back it up.
- Additional monthly/annual premiums may not be a viable option for many families; hence the low uptake of cash plans in the UK.
With only 7% of the UK population currently being cash plan owners, it would seem that cash plans are a solid investment, but only when it is an affordable option, even then the right plan should be sought to ensure value for money. With public spending cuts starting to hit home and the NHS being under scrutiny, now may be the time when cash plans are seen less as an affordable luxury, and more of an essential commodity.
