The protection provider PruProtect (sister company of PruHealth) has introduced a new PMI plan. More of a module than a standalone product, the ‘Health Cover’ plan can only be purchased as a bolt-on to one of Pru’s protection policies: life, income protection or critical illness cover, or a combination thereof. 

Three levels of cover are available: comprehensive and mid-range plans (comparable to PruHealth’s ‘Comprehensive’ and ‘Select’ policies) and a third plan that provides cover for heart and cancer conditions only. Early indications are that this third plan is particularly well-priced and may appeal to protection customers who have otherwise decided against PMI. 

For members who want to combine critical illness cover and PMI, PruProtect offer what they call the ‘Health Cover Optimiser’. According to the insurer, this will cost ‘up to 25 per cent less’ than buying the two products separately. On diagnosis of a serious illness, the member can either take the lump sum from their critical illness policy or opt for a smaller sum and have their private-sector treatment funded.

The underwriting terms—full medical underwriting for adults and moratorium underwriting for children—are fairly inflexible, but to be expected given that the PMI policy is ancillary to a protection product. This is a weakness of the plan, though, especially given that underwriting on traditional PMI policies is becoming ever more flexible. At the end of the protection term, members will be given the opportunity of transferring to PruHealth with no further underwriting.

This is an interesting development and another innovative offering from PruProtect, but it does raise concerns that protection advisers may recommend the Health Cover plan for the sake of convenience when a market review might expose a better option for the client—both in terms of price and cover for pre-existing conditions.