Your reaction to Bupa's Health Fund scheme is a little more hostile than is justified. But perhaps the blame for your evident annoyance at reading this promotional leaflet can fairly be laid at the door of the medical insurer. Health Fund uses the oldest sales pitch in the book: encouraging customers by giving discounts.
Bupa's so-called Health Fund is an offer available only on two mainstream medical insurance policies - BupaCare and Bupa EssentialCare. It is not available on Bupa's budget medical insurance plans. And it is optional for policyholders of the main insurance plans.
If you decide to join Health Fund, you have to reduce your choice of hospital under the insurance policy from around 800 to around 170 "partnership" hospitals. Health Fund participants get a credit of up to 8 per cent (it can vary from year to year) of their medical insurance premium. If your premium is pounds 550, an 8 per cent credit would be pounds 44. This credit can be used to get a discount on a range of Bupa products or on membership of one of 250 Bupa-approved health clubs. But you cannot use your credit to get a discount on a later year's medical insurance premium.
Common sense would suggest that what consumers want in all areas is transparent pricing and straightforward discounting. But perhaps the marketing people know differently. Maybe consumers do indeed respond to those overwrought promotional schemes. And maybe that's because consumers overestimate the true value of a promotional offer. Or maybe they are blinded to the fact that a discounted product can still cost more and give poorer value than a low-priced product.
The consumer who wants private medical insurance would be advised to focus hard on the policies on offer - and in particular the cover, exclusions and premium. Ignore Bupa's Health Fund, and simply consider it a bonus if you do end up benefiting.
I am my octogenarian father's sole executor. He has been entirely resident outside the UK since mid-1993 and is likely to die outside the UK. Most of his investments are outside the UK and he has no property in the UK. Overall, his assets are considerably in excess of the inheritance tax threshold. Do his circumstances mean he and his estate are now exempt from this tax? MC, Bedfordshire
Are you sure that your father's assets would bring him into the inheritance tax net? Remember that certain assets will be exempt from the tax, including anything he leaves his wife (though not what he leaves his ex-wife). In addition, the first pounds 215,000 (in the current tax year) of his taxable estate falls within the nil-rate band and so won't be taxed. Anything over that threshold will be taxed at 40 per cent.
Arguably there is no point in trying to get involved in complicated tax planning if someone's estate is likely to be only a relatively short way into the 40 per cent tax band. Such people should probably retain unfettered control over their wealth for their own benefit rather than worry about saving tax for their heirs. Even an octogenarian could have another 20 or so years to live. Your father should concentrate on making the most of his wealth for his own benefit and pleasure.
If there is a possibility of a significant tax bill, it may be worth consulting a competent firm of accountants or financial advisers. Do, however, be wary of being led into unnecessarily complicated, inflexible or expensive arrangements. And bear in mind that the tax rules can change at any time, making expensive tax planning invalid or redundant. The Labour government will almost certainly review the inheritance tax rules. The assumption is that there will be a tougher regime, but who knows.
Your father may now have shaken off his UK residence status as far as income tax goes. But has he shaken off his "domicility"? To do this, he must "sever all ties with the country of his domicile of origin and settle in another country with the clear intention of making his permanent home there. Long residence in another country is not enough in itself to prove that he has acquired a domicile of choice there unless it can be regarded as indicating intention." For people who are considered domiciled in the UK, the rules of inheritance tax apply to assets both in the UK and abroad.
For more guidance on this, get booklet IHT 18 "Inheritance tax, foreign aspects" from a Capital Taxes Office (0115 974 2424).
In 1989 I took out a with-profits endowment policy to back a mortgage. I think I was told at the time that there was no danger of the policy failing to produce enough to pay off the loan. I think I was even "guaranteed" that there would be no shortfall. But that was eight years ago. Since then I have become a little more financially aware. I have read that some insurance companies are urging policyholders to increase premiums. However, can I rely on the salesman's guarantee, even though I can find nothing in writing? LD, Somerset
One senses that, even as you wrote your letter, you realised that the salesman's guarantee was worth about as much as the paper on which it wasn't written. Without doubt, rogue sales reps do make unsustainable promises. In theory, you might have a case in law against the sales rep (or the firm for which the rep worked) if the verbal promise/contractual obligation is not fulfilled. In practice, proving what was said - especially some 25 years down the line - is another matter.
The truly guaranteed payout from the standard, low-cost, with-profits endowment policy is usually well short of what you would need to pay off a mortgage. That guarantee is set very conservatively and could be worth little more than the premiums you pay over the term of the policy. The guarantee is increased as bonuses are added each year. But these bonuses are also very conservative. You may find even within a few years of maturity that the guaranteed payout is still well short of the amount you require. That's because a large part of the eventual payout will come in the form of a terminal or final bonus when the policy matures.
Which all makes it rather difficult to predict whether your policy is on track to meet its target. Some insurance companies have been worried about falling investment returns leading to lower-than-forecast payouts. Initially, concern centred on policies issued in the early 1990s. But people who took out policies in the 1980s have also, more recently, been advised to increase premiums. The fact that your own insurance company has not contacted you does not mean that everything is fine and dandy. You should seek advice from your insurer, though it may be difficult to assess the worth of their current projections or the undoubted reassurance you are likely to be given.
Maybe your finances have improved since 1989, allowing you to increase your monthly outgoings. If so, consider converting your mortgage into a repayment mortgage. Then you can be sure the loan will be cleared. At the same time, carry on paying your premiums into the endowment and look on the policy simply as a long-term savings plan.
q Write to Steve Lodge, personal finance editor, Independent on Sunday, 1 Canada Square, Canary Wharf, London E14 5DL, and include a phone number, or fax 0171-293 2096, or e-mail email@example.com - do not enclose SAEs or any documents you wish returned. We cannot give personal replies or guarantee to answer letters. We accept no legal responsibility for advice given.Reuse content