Having a child hospitalised due to an illness or injury can be a traumatic and emotional time. In such circumstances parents will want to spend their time focusing on their child and supporting them through their recovery. The last thing they will want to think about is the financial impact. In this week’s insight, we look at which providers help support parents financially if their child needs to be hospitalised.
Children’s Hospitalisation benefit is a feature offered on some critical illness plans and is designed to ease financial concerns by providing a small income boost for the life assured if their child is required to spend time in hospital. These payments can be used in any way the client requires, but can be of great assistance in helping both the life assured and their family meet a number of different costs associated with visiting a child in hospital:
Currently only Aviva, HSBC and Legal & General offer Hospitalisation benefit for the children of the life assured on critical illness plans, however a wider number of insurers offer this for the adult within their Income Protection plans (see our insight on this here). In order for a child to qualify for Children’s Hospitalisation benefit, all three providers offer somewhat contrasting terms:
For Aviva and HSBC, the individual needs to have spent seven subsequent nights within a hospital due to any form of illness or injury. After this period they will pay £100 each night for each subsequent night they are hospitalised, up until a total of 30 nights.
Legal & General on the other hand, will pay £100 per night up to a maximum of £1,000 for every night a child spends hospitalised within the three months subsequent to being diagnosed with a child’s critical illness definition. Importantly, the child does not necessarily have to meet the definition set out by Legal & General within the terms and condition.
Whilst both terms sound different, in reality this means that both insurers would in some circumstances pay out when the other insurer would not as can be seen from the two examples below:
If a child has suffered a severe leg break and was required to spend two consecutive weeks in hospital. After the seventh night, Aviva and HSBC would pay £100 for each subsequent night spent in hospital (so in this case £700). Where as with Legal & General, because a leg break isn’t part of their critical illness definitions, the life assured would have received no form of payment.
A child diagnosed with a cancer covered within the children’s definitions is required to spend several nights in hospital (i.e. for chemotherapy) spanning over a three-month period since diagnosis but not consecutive nights. In this instance, Legal & General would pay £100 for each night spent in hospital. Aviva and HSBC on the other hand, would not pay any benefit because the child has not spent seven consecutive nights in hospital.
For Aviva and HSBC, it is worth noting that if a child was receiving hospitalisation benefits and is re-submitted to hospital for the same or a related reason to the original time spent in hospital, they will waive the initial seven night waiting period requirement (i.e. this can be paid over a number of periods).
The maximum limits also mean that if a child was hospitalised for an extended period, Aviva and HSBC would actually pay more (assuming the reason for hospitalisation met both insurers criteria).
The Maximum Children’s Hospitalisation Benefit Payment
For Aviva and Legal & General, the Children’s Hospitalisation benefits comes at no extra cost for both their standard and enhanced Children’s Critical Illness policies, with both providers allowing this benefit from the birth of the child, up until the age of 22. HSBC on the other hand, only offer this benefit through their enhanced product (HSBC Critical Illness Plus) for children aged between 30 days and 18 years old, (or up to 21 years old when in full time education)
Whilst Children’s Hospitalisation benefit is provided with the aim of helping the life assured meet the immediate costs of their children being hospitalised, it can also help inform insurers of the client’s child’s unfortunate position sooner. This could potentially push the insurer to be proactive in offering other non-financial benefits such as counselling, physiotherapy or other complimentary therapies. Such benefits could be used to further support the life assured, their family and child in difficult circumstances.
As different as all three providers benefits are, each proposition is strong in their own way. Legal & General offer their benefit with no waiting period which can be taken over a span of three months from diagnosis, while Aviva and HSBC doesn’t rely on the client to be diagnosed with a critical illness and can potentially pay more.