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 article, we look at which providers help support parents financially if their child is 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 Aviva, Legal & General & Vitality 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, the child needs to have spent seven subsequent nights within a hospital due to any form of illness or injury. From the eigth night they will pay £100 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 for every night a child spends hospitalised within the three months subsequent to being diagnosed with one of the conditions covered under their children’s critical illness. Importantly, the child does not necessarily have to meet the definition set out by Legal & General within the terms and condition.
Vitality on the other hand will pay £100 for every consecutive day the child spends in hospital after they have been hospitalised for 14 consecutive nights.
This means that each insurer would in some circumstances pay out when the other insurer would not as can be seen from the examples below:
If a child has suffered a severe leg break and was required to spend three consecutive weeks in hospital. After the seventh night, Aviva would pay £100 for each subsequent night spent in hospital (so in this case £1,400). Vitality on the other hand would commence payments from the 15th day and therefore only pay £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 Vitality on the other hand, would not pay any benefit because the child has not spent seven or fourteen consecutive nights in hospital respectively.
For Aviva, 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).
In terms of the maximum amount each insurer will pay, there are again some significant differences. Aviva limit their hospitalisation benefit to 30 consecutive nights and will therefore pay a maximum of £3,000. Legal & General limit the total they will pay to £1,000. Whilst Vitality limit the maximum they will pay per child to £3,000 if the parent has Core Serious Illness Cover for Children and Optional Serious Illness Cover for Children they will pay the child hospitalisation benefit for both covers (i.e. £200 per night). This makes the amount that would be paid.
This means that the amount that each insurer will pay will depend on the length of time the child spends in hospital and in Vitality’s case what childrens cover they have in place. To highlight this the graph below shows the amount that each insurer would pay based on different periods spent in hospital (assumed consecutive nights).
All insurers offer child hospitalastion benefits at no extra cost for both their standard and enhanced Children’s Critical Illness policies. Where a client has the core childrens critical illness cover, Aviva and Legal & General offer this benefit from the 30 days after birth. In terms of the maximum age Aviva offer this up until the age of 18 or 21 if in full time education, Legal & General offer this to age 22. If the client has Aviva’s upgraded child cover or Legal & General’s Child Critical Illness Extra, the benefit is offered from birth to age 22. Vitality offer the benefit from 30days after birth to age 18 or 23 if 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 Vitality do not rely on the client being diagnosed with a critical illness and can potentially pay more if the hospital stay is over an extended period of time.