“The voluntary cash plan market is a tough area for advisers,” says Hughes. “Advisers would be better focusing on company-paid schemes. It’s a growing market and it offers many more opportunities for advisers.”
Health Insurance insight - voluntary versus company paid cash plan design
In terms of benefit design, voluntary cash plans look very different to their company-paid peers.
“While the benefits on a company-paid scheme are fairly streamlined, voluntary schemes have a wider range of benefits and look much more like the individual plans,” says Paul Shires, executive director, sales and marketing at Westfield Health.
As an example, for £1 a week, Westfield’s company-paid scheme, Foresight, gives annual benefits of £55 for dental plus a further £110 for dental trauma; £55 for optical; £150 for therapy treatments; £25 for chiropody: £200 for consultation plus cover for scans and an employee assistance programme.
In comparison, its voluntary scheme, Advantage, at £1.06 a week (£4.60 a month) gives lower levels of benefit on the core elements. For instance dental is capped at £28 a year with a further £56 for dental trauma; optical is £39 over a two year benefit period; and consultation has a payback rate of 75%, with a maximum benefit of £70. Additional benefits are included though. These include a maternity/paternity payment of £55 for new parents; £11.50 for each night spent as an inpatient; and £35 towards homeopathy at a payback rate of 75%.
As well as offering benefits that are more focused on the needs of the individual rather than giving a nod to the employer’s requirements, cash plan providers also need to be mindful of the risk that claims will be higher when the policyholder pays for their own cover. Incorporating co-insurance on some benefits helps to reduce this risk but generally, price tags are higher on voluntary schemes.
For example, although straight comparisons are impossible, plumping for a voluntary plan with Westfield giving a similar level of dental cover to its £1 a week Foresight plan would mean going for its level two option at £2.13 a week (£9.25 a month). This gives £67 of dental cover plus a further £134 for dental trauma.