Full Transcript
Dr James:
What’s up everyone? Welcome back Another episode of the Dennis Humefest podcast with returning face Tony Hammond. We’re here today to talk about critical and honest coverage. Just before we do that, tony, how have you been since we last spoke?
Tony:
Yeah, fantastic. Thanks very much, James Busy. The previous podcast again lots of interest. So, yeah, not really excited to be back and give it another go, especially about this subject which I’m very passionate about as well.
Dr James:
So that’s great Good stuff Something we’ve yet to cover, actually on the Dennis Humefest podcast. So I’m all ears, as well as the listeners, I’m sure.
Tony:
Okay, well, shall I? Shall I fire off? What I want to do really is a bit more to impart some knowledge on everybody and make people think. In what I do I pride myself that I have uncomfortable conversations. I think it’s about being comfortable, about being uncomfortable, and when I talk to my clients I don’t feel I’m doing a proper job unless I’m looking at all areas, because people have heard before I help principal dentists provide their financial safety net, so that’s themselves the families and the practice. But a big chunk of that is what I’m going to talk about today. Now I do what it says on the tin. There’s lots of jargon in our industry in the financial industry as well as the dentists and the dental world but I talk about critical illness. I call it cancer cover Because essentially that that’s what it is, and I’ll explain a bit more about why that is. A lot of people have heard it being critical illness. Sometimes it’s referred to as serious illness and it depends on the providers. I can see a wealth of providers out there all offering similar products to the layman. But I think as we go through this you’ll understand that it’s there’s lots of variables and you really got to know your stuff. I’m going to give you a quote, just let me look at it. So there was a doctor, marius Barnard, who was the creator of critical illness, and he sums it up well. He says you need insurance not because you are going to die, but because you’re going to live. And I think that’s really important when we talk about this sort of stuff, especially if we’re talking about cancer a lot. So this was going back. It was originally designed in the 1980s. That was in response to the severity of the conditions at the time, where, believe it or not, seven out of 10 heart attacks and three out of four cancers were fatal. So originally there was only three conditions that were covered. But now, because of modern illnesses, trends and the screening, the diagnostics that we have and the treatment, it’s got a lot cleverer. It makes it more likely than ever that someone’s going to survive a serious illness. The survival rates, the 10 year survival rates, have doubled, so now it’s one in two compared to one in four, which was in the 1970s. So because of that, some conditions they’re going to be have less of an impact today than they would have done, because we’re able better able to treat them. So this has led to some providers introducing severity based payments. I think the industry is changing, it’s getting better and they’re adapting to the modern world, so I think this can give us peace of mind that we’re more likely going to get a payout. The providers all offer this very different, so some will cover all heart attacks, all strokes and more cancers than ever, providing that financial safety net that I talk about a lot. And, as I said, many people make a full recovery. I know many people that have made a claim, paid off the mortgage and then get back to full fitness, which is wonderful. That’s where we all want to be. But there’s a journey to go through. But because people are making a full recovery, it’s also leading to more people being more susceptible to secondary illnesses or occurrences. So it’s a bit of a horrible fact, but one in five of all cancers are reoccurrences. I think back to the great late Sean Locke, who’s my favourite comedian. He had originally had skin cancer and then got better. Then, decades later, a cancer came back and hit him and unfortunately took him. I think it was about a year ago now. So it does come back. So it can make people more vulnerable Once the payout’s been made, because with a lot of providers. Once the payout’s been made, then that’s it, the cover stops, and they’re pretty much uninsurable. But there are others out there now that can pay up to three times. So if they had so take Sean as an example if he paid out in full the first time, if he got something else, it would pay out then up to three times, dependant on the type of cover that people can take out. So cancer cover critically honest, what is it? It will pay out a tax-free lump sum. Occasionally it depends on the type, it might be monthly, but 99% of the time it’s a tax-free lump sum If you’re diagnosed with a specified illness or condition. I really stress that it doesn’t cover everything. It’s a specified condition. And also my compliance department would really want me to mention so excuse me on this one that the policies won’t have any cash in value and the cover would stop if you stopped paying the premiums and you wouldn’t get any money back. But it’s just like any minimum insurance policy really. But just have to say that. So it can be bought alone as critical illness, as a standalone product, but the vast majority of them it’s included with life and critical illness. I’ve checked it many times with quotes, and sometimes it’s even cheaper to have life insurance included than to have it without. So go figure. So even having life insurance, it’s not going to cost very much more, even in the worst cases. I thought I would start off with a few statistics. I’ve done some research before I came on to make sure that the figures I’m talking to about are up to date. So, according to cancer research you may well have heard this one, it’s a common statistic One in two of us will be diagnosed with cancer in our lifetime, which is pretty shocking. There’s one stroke happens every five minutes in the UK and around a quarter of all deaths in the UK are heart related. So they’re the three biggies cancer, stroke and heart attacks and heart disease. I’ve chosen Aviva just to look at their claim report. I think they’re fairly typical for the industry. So for 2022, 57.6% of all claims are for cancer. So that’s why I call it cancer cover, because there we go 9.7% for heart attack, 7.2% for stroke. Scarily, 5.7% of all critical illness claims are for children and 3.1% for MS. I won’t go any deeper than that. So over two thirds of all claims are for cancer or heart attack. What also is interesting, I split it down by gender and see the differences, which really surprised me. I don’t know if it will for you. So for cancer, for men it’s 49.7 of all claims is for cancer, but for women that went up to a whopping 71.6%. To be precise, of all claims with Aviva for women were cancer related. Heart attack for men was 18.4%, but for women that was only 2.8. I’m not a doctor, I can’t interpret these in the great detail. I think that’s probably more lifestyle Stroke. That’s 9.9% of men that made a claim. It was for stroke and 5.6% for women and I’m not supposed to say this is specific to Aviva’s claims. I think you can use it as a rule. It says a guide. If nothing else is an indication, but I think generally it’s there or there about. With this insurance, unlike some critical illness, the providers are very keen to explain their claims and the percentage that they claim out. For Aviva they paid. 93.5% of all claims were paid. They want to pay out. They’re not trying to get out of it, as some insurance may have that reputation, not critical illness and the reasons why that 6.5% wouldn’t do a lot of it’s misrepresentation that people may not have disclosed everything on application, because if you were to get a critical illness, in all likelihood the provider would go to the GP, get the GP report and if there’s something on there that you haven’t mentioned at time of application, then you will be declined. So it’s really important about being upfront and honest about the diagnosis and issues that you may have had in the past. And a big 4.4, the definition wasn’t met for whatever reason. So it’s all about the small print with some providers and again I’ll go on to that in a bit more detail. Some providers are much easier to make payouts and some are more. It’s got to be exact. As far as the details concerned, we all know somebody that’s been affected by cancer, as I said, one in two in our lifetimes, but I know personally how devastating it is to hear the word that you have cancer. It’s something we think happens to other people, but, as you can see from the statistics that you just heard me talk about, it’s very much likely to happen to one of us or our loved ones one in two in our lifetimes, and the emotional toll that that can throw at you as well is can be devastating. It’s one of the scariest times. Even if you’re expecting it, you will have probably a lot of waiting round for lots of various tests to hear the results, then also for the treatment of it. So it affects the whole family. But, as we said, the good news, especially with the screening programs. So for women, we know breast cancer is the most important one the mammograms and things like that, and cervical smears and things. It’s so important because the big C isn’t always a death sentence, as it was, as you heard me before. So there’s a lot of hope. However, we have to protect ourselves, our families and our businesses against the impact, if that can happen, especially when risks are so high. This cannot be ignored. So it’s there to protect your home, your job, your lifestyle, your staff and providing one less worry at a very difficult time, and this is that financial safety net that I refer to. So, if you are critically ill, not having financial worries is so vitally important. It then helps you concentrate on getting better. Just think about it. How would you cope financially yourself if you were one of your loved ones, your close loved ones, was diagnosed with a critical illness? You have to take time off work, make adaptions to your home if you’re disabled, something like that or have to look after your children, god forbid. So critical illness cover there to help us focus on getting better rather than have to worry about paying the bills, so you can focus on getting better rather than getting by. I think when I first started in this industry many moons ago, I thought all critical illness cover was the same and then if you get cancer you get a payout, if you have a heart attack you get a payout. But that’s not the case. I was wrong on that. Not all cover is the same. There’s big differences in the marketplace and there’s big differences to if you had a critical illness policy 10 years ago to what is available to you today and there’s so much more covered. So it’s worth having a review, even if you do have critical illness cover. So, across the UK, the plethora of UK providers out there and the number of conditions that will be covered there is from. There are some around 30, 35, right up to the best in the industries 174 conditions, so a massive range. As you can see, out of that, 174 headline product, 74 of those payout 100%. But I talked about the impact dependent on what the illness may be. So the remaining 100 will pay out on the condition of the impact it has on your lifestyle and that can, excuse me. That can vary from 5% right up to 100%, but there’s more likelihood that your condition will have a payout than it would have done in 10 years ago or so. I touched on the point that one of the providers this particular one I’m referring to is Vitality can pay up to three times if you choose the top cover. So you could have three different claims at 100%. So if you’ve got 200,000 pounds, some assured, it could pay you potentially up to 600,000 pounds in the plan time If you were unfortunate enough to have three diseases conditions that I mean the specified conditions and, as I said, because cancers can reoccur, that makes that more likely. Talked about children. I don’t know about you. I’ve got an 11-year-old daughter. The thought of her becoming poorly is I just don’t want to go there. But there are children’s cover out there. It can be from birth right up to 23 years old, where typically for a child for example, if with my critical illness cover, my daughter would be covered up to 25,000 pounds if she’s diagnosed with a critical illness Others, you have that as an option. You have to pay extra for that, but you could increase that up to 100,000 pounds if you wanted to pay the extra for that. There are also some conditions that are covered during pregnancy if there’s any complications. But if you think if the child’s ill you’re going to have to take time off work and this is really to cover you for that, to make sure that where you need to be is there for your child. If the worst happens and the child was to die, then some pay a 5,000 pounds death cover and that can be from 24 weeks of pregnancy as long as that’s not an elective termination. Moving on, some policies have lots of added value. Services which I think are really important I’ve used many times myself. So, for example, you can have access to a GP 24-7, wherever you are in the world. So if you’re sitting in Dubai, james, and you need to speak to a British GP, you could just phone them up 24-7 and speak to either a GP or a nurse. Depend on the provider that’s a British GP. I’ve often that’s out of hours. I’ve used it myself at the weekend. I’ve had a conversation 10 minutes after picking up the phone. I’m not saying it’s going to be that quick all the time, but it’s a very responsive service in my experience and I had a prescription was sent to the out of hours chemist nearest to me and they take you through that. So that’s really useful If you have children times at their poorly, in the night, on a Sunday when the normal GP isn’t available. So, but that also counts, not just for you, but it’s for your immediate family. So your spouse, your children would also be covered, even if you just got the one policy. So that’s a really good benefit to bear in mind. For a lot of people Some people, it’s not particularly relevant, but for me that that’s a big tick. One of my favorite add-ons I’ve now experienced is second opinion. This has been a massive piece of mind benefit for us. So diagnosed, as I say, diagnosed with cancer, then you’re able to get the treatment and the diagnosis checked by the top consultant, top oncologist in that in this example and for us, that was a gentleman based in America who’s the best one of that. So what they do? They look at the diagnosis and the treatment plan. They may recommend something else which you can then speak to your doctor about, whereas in our case it just explained that this is, you’re on the right path. So you know, with something serious like that doesn’t have to be cancer, it could be for anything that you know that you’ve got the best advice and the best treatment happening for you. There are other policies out there. Aviva had one called global treatment. That means that if your particular complex illness, the treatment needs to be in America, for example, or Canada or somewhere else, then they would pay for the hospital admission, that travel, the accommodation for both the patient and one of their loved ones to go out with them whilst that is happening. I think there was something in there. I read about some stem cell treatment in America or maybe it’s Canada, but anyway, you get the point. But that’s only £3 a month extra to have that facility. So with critical illness there’s lots of add-ons that you can think about, depending on what’s important to you or not. Another one I talked about the emotional toll that things can have. There’s counselling available and there’s physiotherapy if you need it, with some legal advice with others. So it’s not just critical illness itself, it’s the added value that they can offer as well. So I think it’s really important about comparing apples with apples. It’s a bit like car insurance you can drive a car with just the party or you can go all the way to have the best comprehensive cover, with lots of value ads and things like that as well, and it’s the same with critical illness. Also, going back to the car analogy, I would challenge you that if you have as we all will have to have car insurance, that you need to ensure yourself for at least as much as you would have for that piece of metal that’s sitting on your drive, where you’re far more important than the car. How many of you have actually insured yourselves? What happens with a lot is that the policies start at the basic level with some providers and then you can either use enhanced or upgrade they call it. There are other providers out there that are at the top of the tree, that just have the full inclusive insurance that I sort of touched on before. I’ve talked about the prevalence of cancer already the most common cancer that a lot of you may be aware. So for men, prostate cancer is the number one, and that’s 20.6% of all male cancers is prostate cancer. And in women, breast cancer is the most important one, most prevalent, and that’s a whopping 48.5% of all cancers with women is breast cancer, and the treatment varies significantly between providers. So it’s important to understand that, what you’ve got covered and what isn’t, because otherwise their claim could be declined. Just give you an example prostate cancer. If you’re diagnosed with prostate cancer there’s what we call a Gleason score and that varies typically between two and 10. So Gleason scores assigned to that cancer Scores between one and six are considered low grade. So about 95 percent of cases are treated by active surveillance in that case and they don’t need further treatment or surgery or anything like that. So most providers would only pay out if the Gleason score is seven or above. So you could have prostate cancer and not get any payment with a lot of providers out there, but there are some that would make that the smaller payment for treatments between two and six so that’s typically up to 25 percent at the summer should up to a maximum of 50,000 for scores between two and six. But if they were then to progress to seven or above, then a full payment is made Again. Prostate cancer one in eight men will be diagnosed with cancer in their lifetime. It’s very, very common. We know that the king went into hospital for an enlarged prostate. Now that’s very, very common as well. But for cancer it’s one in eight, one in four of which will be diagnosed with a score of six or below so deemed low risk and only 4% of those deemed low risk would undergo treatment. So a lot of people could have prostate cancer and not get any cover at all. Where other providers you do get cover Breast cancer. So for the ladies typically not always, but for the ladies majority of the time some will only pay out if the breast cancer is spread, it’s invasive cancer. If it’s called in situ so it hasn’t progressed, then there’s typically payments up to 25,000 for that if they cover it with in situ. But if it’s invasive cancer they’ll pay out in full. But with a lot of breast cancers it’s not and the survival rate for breast cancer is excellent, hence why a lot of them don’t cover it, because most people go on to recover fully, thank goodness. But some cover has changed over the years, it’s been improved. I’ve got some really clever software that compares all providers and all historical critical illness policies. So if someone’s got one of 10 years ago I could look at that, compare it to one today and then say, okay, today these are all the things that you covered for versus what you had. Or if it’s a new policy for somebody that hadn’t had critical illness before, I can compare two or three of the best ones around their budget and say, okay, based on that, this one will cover you for a lot more than the other one and I can provide a very clear, full report that explains why I’m doing that. So I think that’s really important that you get good, clear advice. If you do have an existing policy, don’t just think everything’s covered get it checked. I’m happy to do that for you If that will help give you a review to see where you’re at, because you might want to upgrade or change it if time has moved on. There’s also some policies out there now that a lot of them will cover you for dementia and frail care. We know that’s far more prevalent nowadays. What would happen is that some cover stops once the plan ends. Say, you reach 67 as the state of time at age, but others will if you continue to pay your premiums. They’ll switch the cover from cancer cover to dementia frail cover, so it will continue to pay out should you get a later life disease such as dementia or Parkinson’s, something like that as well, whereas otherwise you’d be uninsurable at that age. So that’s again something to think about and have a conversation about. So I’ve talked about that very clever software that I’ve got that compares everything. But it’s also important to think about what actually are we protecting? Most critical illness policies and I say most of them are life and critical illness are there to cover a mortgage. So I’m a mortgage broker as well. So when I speak to my clients about mortgages in the very first call, I’m also saying, as part of their budget, they need to have cover in place to cover them for life, critical illness, income protection etc. So they can keep their home if something bad happens. And, as I’ve already said, one in two will get cancer in the lifetime. So most of them out there are designed to help people with their mortgage. The way it would happen is, if they’ve got a capital repayment mortgage, as the mortgage goes down, the balance decreases over the years. The amount of insurance goes down with it as well, whereas if they may have an interest only debt, then the level stays the same, in line with the debt for the period of that debt as well. What else to say? Oh, yes, the premiums can be guaranteed. So if you’ve set up a policy 20 years ago, it will still be the same now, whereas if you took life for life cover to date. It’d be a lot more expensive because a lot of it is based on age as well as medical conditions, so they can be guaranteed. The alternative is a reviewable policy. I haven’t really done many of those thinking back, but that’s where the premiums would go up or down after the first few years when the insurer can review your premiums and see how fit you are or not. Vitality, for example, they have one called optimized. You can choose to have an optimized policy or not. The optimized policy starts off at typically around 20% cheaper. But they want you to engage in their fitness program, their rewards program. So how many steps you do? Do you see the doctor, the dentist, etc. You get more points and the more points you have, depending on the status, at the end of the year the renewal can either be it doesn’t increase at all, or if you haven’t engaged at all, that’s called the bronze status. Then you’d have your increased premium of 2.5%. So it’s still going to be much cheaper for a long period of time. But that’s not for everybody. I’ve spoken to dentists who wanted that guaranteed price all the way along, so an optimized product wasn’t suitable for them. And with Vitality the idea behind that they’re happy to give a discount upfront. That’s because if they feel that their clients are fit and well, there’s much less likelihood of them claiming in the furthest place. But most of the providers they will provide cover for the big three. So heart attack, stroke, a lot of cancers and MS to varying degrees. I say that providers are all different. So because of that, I think it’s even more important that you speak to a broker about your specific circumstances and what’s important to you, your family, what your budget may be, your life priorities and things like that. A couple of other things to consider is total permanent disability. Dentists are in a good area with this is that if you’re disabled for any reason, permanently and totally, that you can’t work as a dentist anymore, there are some providers that would pay the full cover for that. Other providers less so. They would want, for example, six daily tasks that you’d have to fail at before they would pay out. But there are providers out there if you can’t be a dentist, so it’s your own occupation for dentists, then they will pay out for total permanent disability, or TPD as it’s known. There’s also fracture cover option. Some cover has that automatically included, like LV, for example. Others Viva, for example, would charge you extra for fracture cover. So if you break your bone, depend on the type of bone, depend on the payment. Because I specialize in businesses, particularly providing that financial safety net for businesses you can. Also there is elements of the business insurance that you can put as critical illness as well. So you deferred. If you’ve listened to the podcast before, you’ve heard me talk about life insurance and through the business. It’s a limited business that’s called relevant life where you can offset that life insurance on expenses, offset it against tax, so it’s really cost effective. So if you’re a higher rate payers also dentists are it’s actually 49% cheaper than if you’re paying it out of money that you’ve already paid tax on. There is an option with a Viva where you can get a significant critical illness cover included in that, which HMRC has agreed can be offset against tax as well. So they call it significant illness rather than critical, but it’s on the same lines. It’s not as effective. Well, it has a number of conditions, isn’t as many, but for a lot of people that’s great cover. Otherwise, critical illness can’t be offset against tax if you do it through the business. A really good area that people should seriously consider is group critical illness cover for your business. So that would be if you want to ensure three employees or more, then you can have a group about critical illness policy. So it’s very cost effective. It provides a tax-free lump to the individual. You can do up to five times maximum of your salary, up to £500,000. The good thing with this is that there isn’t any medical underwriting. It’s a bit like private medical, the likes of people, where you’d have what’s called moratorium, so any previous conditions are excluded. So if you have cancer and you take out group critical illness, it won’t cover you for that if you had it permanently at the moment, unlike private medical in some circumstances. But I’m going with the tangent there. So group critical illness if three staff or more could be your dentist associates things like that that you wanted. That’s something to consider and the business pays the premium. Also, we haven’t discussed on the podcast here, but shareholder protection, which is designed as a life insurance to protect stakeholders if it’s a partnership or shareholders if it’s a limited company. But you can also have critical illness added to that as well. So if a business owner dies or is diagnosed with a critical or terminal illness, their share of the business usually passes to their beneficiaries or themselves. If it’s a critical illness, they have a choice, which means that the control of those shares passes to the remaining directors. So other business owners may want to buy that share, but businesses don’t have the money to do this. That’s where it can be costly to borrow if you haven’t got insurance in place. So the shareholder protection allows business owners to buy back those shares from a co-shareholder which is diagnosed with a critical or terminal illness or dies. That’s the life insurance element. So that helps the surviving owners stay in control and minimize the disruption of the business. So if the practice principle is diagnosed with cancer, then it would pay out and the business pays for that policy. Another one he person. It’s often just life insurance, but you can include life and terminal illness. You can include critical illness on that. So that would pay the business. So if the practice principle was poorly, it would pay the business to help while they’re looking for a replacement or if they’ve got to undergo reorganization. So it’s really to protect the profit and that’s what key persons there to do. So we may be budget-driven, but I would ask you the question can you afford not to look at this type of insurance, considering how the risks are one and two of us in our lifetime. So think about what would happen in your position, your situation. How would you, your family, your business, how would you cope if you were to be diagnosed with cancer, for example, and can’t work? What would happen then? So sort of summarize all of that. I would say cancer cover, as I call it, is something we should all be considering now, especially if it’s a personally experienced what you can go through and the benefit of having that insurance. A piece of mind I can’t tell you it can avoid a financial catastrophe. So if you’re poorly, you think I can’t afford to pay. You may lose your house, the mortgage, things like that. This is to put in place to do that, so it protects your loved ones, your work colleagues, things like that. So it’s an important part of the safety net that I talk about. So it’s that you can make sure you can pay your mortgage your bills still carry on, which itself is massive, but it’s that emotional support that you have in place at the worst time of your life to have this insurance in place. Can you afford not to have it? So I would leave it by if you want to know more. If you want to review your existing policy, if you want to find out how much it would cost you be yourself, your family or for your business, then please feel free to give me a call. How was that, james? I know I’ve been chatting for a while.
Dr James:
Absolutely awesome as ever, tony, thank you so much. Thank you for that comprehensive cover of critical illness cover, and you know what I think? What a beautiful moment to just go ahead and wrap all of that up on right. There is just what you just finished saying on. So, yeah, thank you so much for your time once more, tony. I’m sure we’ll see each other very soon again on the Dennis Invest podcast.
Tony:
Wonderful. Thanks for the opportunity. I’ll see you guys next.