Find out the best insurance options for your children
When it comes to life’s priorities, your children’s health is probably near the top of the list. The problem is that Health Insurance for children is not something you can purchase and parents can’t legally insure their kids on an individual basis. But, all is not lost. Here’s how parents can go about addressing the problem and sorting out the gap in the market for health cover for children.
Independent Protection Expert at Drewberry
What’s The Best Way to Protect Your Children’s Health?
It’s difficult to get Life Insurance for children (including cover such as Income Protection or Critical Illness Insurance) on an individual basis. This is because, in legal terms, parents don’t have what’s called an ‘insurable interest’ in their children.
This makes good sense but, as this is a requirement of any insurance contract, it means that parents don’t have the legal grounds to insure their children on an individual basis.
This explains why there are no stand-alone children’s Health Insurance or children’s Life Insurance policies available on the market.
The notable exception to this rule is Private Medical Insurance for children (PMI) because the benefits are paid to the private hospitals that provide the care needed, and not to any beneficiaries, there’s no ‘insurable interest’ to worry about.
Consequently, mainstream Health Insurance providers like Aviva and AXA offer individual Medical Insurance for children. Even so, it’s still far more common for children to be covered by their parents’ Family Health Insurance policies.
The same is true when it comes to other insured health benefits as, these days, most mainstream life insurers can extend the Critical Illness Cover (CIC) they offer to include scaled down Critical Illness Insurance for children. This, however, is only a partial solution for concerned parents.
Health & Wellbeing Expert at Drewberry
There are a range of products to protect your wider family as a whole from the various risks life could throw at us. For more on this, read our guide to Family Insurance >>
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The Small Print on Children’s Insurance
More often than not, Critical Illness Insurance for children is limited to the lower of 25% of the sum assured or £25,000, but this can vary among insurers.
With many Critical Illness policies, the child is covered for the full list of conditions. However, some providers also include additional child-specific definitions, such as those present from birth, so it’s worth checking the small print if you’re looking for worthwhile protection.
It’s also probably worth focusing on those providers who have come up with more creative ways to enhance the children’s insurance coverage they offer as ‘riders’ on adult policies. Currently, the leading players in this space include the likes of Vitality, Aviva, AIG and LV.
Each has come up with ways to break away from the 25% rule, which makes securing decent levels of Illness Insurance for children an expensive outing.
The Best UK Insurers for Children
Some insurers go the extra mile when it comes providing additional cover for children. The below are some examples of the
Vitality’s Serious Illness Cover for children can be set as high as £100,000 per child and can be added as a rider to any of its ‘core’ Life, Income Protection or CIC products.
Although Aviva limits Critical Illness Insurance for children to £25,000 as part of its adult plan, for an additional few pounds per month, parents can add Extra Care Cover to their children’s insurance policy. This offers up to £50,000 cover on 11 serious conditions
Meanwhile, Global Treatment Cover, which costs around £4 per month, provides cover similar to Private Health Insurance to meet the cost of any overseas treatments. There’s a limit of £2m over a lifetime. However, this only applies to six illnesses or treatments.
Liverpool Victoria will pay up to £50,000 or 100% of the amount of cover (whichever is lower), if a claim is made for the child having suffered one of ten conditions which are the result of an accident, such as blindness.
AIG offers up to £25,000 in stand-alone Critical Illness Insurance for children, but with the possibility of a double payment of up to £50,000 if ‘curative or stabilising’ treatment is only available overseas.
Most Critical Illness Insurance policies include some element of children’s cover as standard. However, an increasing number of providers now offer ‘enhanced’ children’s cover, which will payout for, among other things, serious congenital conditions.
For those thinking of starting a family, an enhanced policy is well worth considering, especially given the financial burden a sick child will place on the household.
Independent Protection Expert at Drewberry
Thinking Ahead About your Children’s Insurance
As insurance advisers, when we talk to parents who are concerned about making sure they have decent protection for their children, we encourage them to think carefully about what they’re really trying to protect.
The problem is that with a standard adult Critical Illness policy of, say, £50,000 a 25% payment on the diagnosis of a critical illness in one of their children would pay out just £12,500. In most cases, this is no substitute for losing a year or more in salary.
In reality, coping with a child’s serious illness is likely to mean you or your spouse have to quit work to look after the child and ensure they get the care and treatment they need.
It could mean selling your house or any one of numerous other radical lifestyle changes. From this perspective, £12,500 isn’t going to go very far.
For parents who are really concerned about this sort of scenario, it actually makes more sense to look at Income Protection Insurance that will cover you in the event that you’re forced to quit work due to your children’s health.
You can add a children’s cover rider to this too with Vitality or AIG while Aviva’s Income Protection plan offers an additional ‘Family Carer Benefit’ that will pay out around £1,500 a month for a year in this sort of scenario.
Taking a comprehensive approach to your children’s insurance could include elements of Private Medical Insurance, Income Protection and Critical Illness Cover, which will be beyond the means of most ordinary working people.
This means that finding the right balance of children’s insurance cover is ultimately an exercise in identifying the core risks that you want to cover and then building the most complete plan from the premiums you can afford – something that’s best done by talking to an experienced protection adviser.
Director of Drewberry