Kathryn (00:03):
Hi everyone. We are on episode 15 of season five, and today you just have me, and I’m going to be talking about getting insurance when you’re in the armed forces. This is the Practical Protection Podcast.

Kathryn (00:18):
So, everybody today, we’re talking about people who want insurance, who are in the Army, Navy, or RAF. The reason that you just have me today is that usually we would have Matt Rann on an episode like this, obviously bringing us all his wisdom about the risks and what insurers see about the risks for certain situations, and what it can mean for the terms of insurance. Now, me and Matt did have a good chat and what we decided was between us that really, we think the majority of people who are listening to this would be quite easily understand and see where the risks are for people who are in the armed forces. To be quite sort of like upfront about it, the risk that the insurer sees is that this person is going potentially into a situation where there’s a much higher risk of death than say, if they’re in an office job, I’m just going to say Filey, because I’m in Filey, but in the middle of Filey, there’s far more risk, obviously, if you are going to be going out to an active war zone, that’s not obviously everybody in the army that’s in that situation, but I will talk about this as we go through and going to explain it all, hopefully in a nice and simple way.

Kathryn (01:18):
So, it’ll probably be a bit of a shorter podcast today. So, people, I, I think will probably enjoy that just as a bit of a, a shortish natter, hopefully I’ll then behave myself because I am a natterer, but let’s get into it. So, when it comes to the armed forces, if somebody is not under orders or they’re not on high readiness to, to be deployed, they’re not doing a hazardous occupation then with quite a few insurers, you might see life insurance, potentially at standard rates. But with some of them you might see that they do something known as capping the sum assured. So that would be that they maybe turn around and say, yes, we will ensure you, but we will only insure you to the maximum of your mortgage amount, which we might not always seem ideal because as an advisor, we’re probably going, be wanting to cover that mortgage.

Kathryn (02:05):
We’re probably going to be wanting to put some family protection in place as well. But we might just see that with, with a couple of insurers. And when I talk about hazardous occupations, obviously with armed forces, we kind of, in some ways assume that it could potentially all be hazardous, but that’s when we talk about people who are doing things like the bomb disposal, people of frontline I was speaking to somebody not long ago, who was he told me that the name of his occupation. So, forgive me if I do get it wrong for anybody who is very army focused. He told me he was a machine gunner on a Chinook, and that was interesting doing the research and getting him the insurance, which I’m pleased, very pleased to say that I did. And so, it’s quite interesting as I say you might get some standard rates.

Kathryn (02:45):
You might get some that are capped at the mortgage amounts. And what becomes really interesting is if you get an insurer that says, right, we’ll give you standard rates, but we’re going to say it’s to a maximum of the mortgage amount that we’ll offer. But then you might get another insurer who says, well, we’re not going to stick it directly to the mortgage amount, but we’re actually going to be loading the premiums. I’m going to go through the loadings of how they might work soon. I will be doing a little bit of math. I hope it won’t be too intense. I’m going to try and really keep it not too intense. I’d suggest getting maybe a pen and paper so you can write down what I say. So, you can follow what I’m saying, hopefully as best as possible. But also, there is always transcripts for these podcasts.

Kathryn (03:22):
You can always go back and have a look through of what I’ve said as well for somebody who is actually under orders. So that means that they are due to be deployed or they’re very, very actively going in a sense tomorrow. For insurers that are able to offer again, they would usually say that they would want it to be mortgage related. You know, the, they want to make sure that obviously they’re ensuring a very specific liability that is presented obviously for that person. And with lots of insurers in that kind of an instance, you’re going to get, what’s known as a per mille loading. Now per mille loadings and generally loadings can be absolutely wonderful to try and figure out, it doesn’t help at all, that insurers all have different ways of doing per mille loadings.

Kathryn (04:06):
So, it’s never the kind of thing where you see one do it one way and assume that the others are doing it the same way. It’s all quite individual. But hopefully even though it is quite individual the way it is done, I’m hopefully going to be able to give you some sort of background as to how it generally does work. And hopefully I always used to find it quite scary actually, per mille loading, I have to say it’s maybe it’s just me. But it’s, it’s just, it takes a bit of maths okay. Thinking about critical cover then. So, with critical illness cover, we would usually see an exclusion. So, there are two ways that you would maybe see an exclusion for somebody in the armed forces who’s wanting critical illness cover. The first type would be an occupational exclusion. So that would be anything that’s sustained during the occupation.

Kathryn (04:53):
So, for things like that you know, we’re saying then that we’re not necessarily, we’re not excluding certain conditions from the policy, which is something that we would maybe see with some health conditions if someone had that in their past. But what they’re saying is right, if you are actively doing your job and you are diagnosed with one of these conditions, then we just won’t pay out. If you have one of these conditions and you’re not actively doing your job, then we will. But if it happens while you are deployed, while you’re doing, you are doing your active duties, then we won’t pay out. So, some good examples of that would be maybe you know, somebody who is out has been deployed and they have a traumatic head injury. They maybe have a heart attack of a stroke due to some kind of event that happens.

Kathryn (05:38):
Well, if there’s an occupational exclusion that won’t then pay out the claim on the, there’s pros and cons to both of these types of way of the exclusion. But on that one, obviously the negative is that obviously there is quite a significant risk of some of these conditions happening while the person is deployed in active duty. But the positive is that if they do have one of those diagnosable conditions and they’re not deployed, they’re not actively at work, then it will pay out. So, then we have the other side of things, which is where they would maybe, an insurer might exclude certain conditions. So, we might get an exclusion for a coma, or third-degree burns, maybe. So, it’s, it’s something where it’s much more specific that they maybe see as really high risk based upon that person’s occupation, the difficulty that, that can obviously seem in some ways it’s a bit of a positive compared to the other one, because we’re not saying everything that might happen abroad or whether when they’re obviously actively deployed.

Kathryn (06:35):
But the negative of this way is that it’s not just occupation related. So, they might say, all right, we won’t cover you for third degree burns, but that’s any, any reason any time doesn’t need to just be while they’re actively at work, it can also just be while they’re at home, if something happens. So, it is a real it’s a real debate. Let’s just put it that way as to which way is better. Sometimes it might be that you only really have one choice because of that person’s specific circumstances. It could be that there’s not just the occupation, there might be some health factors as well, which means that you do just have one insurer. But if you do end up in a situation where you have both of these options available what I would suggest is that you give the client and the person both options so that they can then make an informed decision as to what feels right for them.

Kathryn (07:25):
It can be very hard though, cause people can say, well, what do you thinks right? And sometimes you just have to say, and sort of like keep that thing of saying, I, I can’t say what is or isn’t right. It has to come down to what feels right for them. And yeah, it could be quite tricky conversations. A really important thing to know if you do have somebody in the armed forces that you are supporting and getting their insurance. And there is, what’s known as a premium loading to the premium. So that means the premium is increasing due to their occupational duties. They can potentially get a refund from the MOD. So, what they need is a, to get, and should really make them aware of this is what’s known as a J P A F 0 1 0 0 form. So just because of my Northern accent, that is Juliet, Papa, Alpha, Foxtrot 0 1 0 0.

Kathryn (08:18):
And what that means is that they can fill in that form and they can apply to the MOD to refund up to 90% of the premium loading up to 200- and 7,000-pounds worth of sum assured. Now, depending upon I’m going to go through in a second, the way that the premiums can be affected, that can be a significant refund for the person. And it is refunded annually by the MOD, really, really important that you make them aware of it. So, we’re talking about the, the loadings, when we look at insurance premiums there’s two ways that insurers tend to increase premiums and that would be either percentage or a per mille. Now I’m not going to focus too much on the percentage because I don’t want to just throw loads and loads of numbers around. But percent percentages we usually see if there’s like a health history or something that the insurers are thinking, you know, that there’s maybe a bit of an extra risk. The per mille ones are I like to call them a barrel of laughs basically, because what happens is the premiums are increased by every 1,000 pounds worth of cover that’s being taken out.

Kathryn (09:26):
So’s just make that really sort of like clear. And I do tend to use extremes of examples. Just because I think that for, for me, it helps me to like really hit home. The difference. That means that if you were to insure somebody for 50,000 pounds versus someone of 200,000 pounds, there is going to be a huge difference there in the premium because in the 50,000 we have in a sense of 51,000 that are being taken out and we know the insurer is going to be increasing the premium for that person in a sense of that amount by 50 times for the 200,000, then we’ve got 200 of those 1,000-pound premiums. I’m going to hopefully give a, a simple example. And if anybody who’s listening who is from the underwriting world or anything, I’m using a very large per mille rating here. I know it’s not what everybody will be seeing, but I’m doing it just because the fact that it’s much easier for me with the math’s and to make it as clear for everybody as possible.

Kathryn (10:20):
So, what they do is with the per mille it’s seen, as what’s known as cash amount, a cash extra premium for every thousand pound that is bought. So, per milles can range quite significantly from one pound too much, much higher, but I’m going to take 10 pounds per mille as an example. So, what that means is that for every 1000 pound that’s taken up, there’s an extra 10 pound per year added to the policy premium. Okay. So, if we have someone who has 200,000 pounds worth of sum assured, that’s what we’re wanting to do. So, they have 200, 1000 pounds there that has been taken out and we know for every thousand pounds, there’s an extra 10 pound and bear me, because I know I’m just saying a load of numbers here. So basically, we’ve got 200 times 10 because that’s the 200,000 pounds and the 10 pounds for every thousand pounds, which gives us 200 times 10 is 2000.

Kathryn (11:15):
So, this means every year, the premium is going to be an extra 2000 pounds. That’s then divided across the year into the monthly premiums. So, for somebody in that situation, so 200,000 pounds, sum assured at a 10 pound per mille rating. That would mean every month that that person would be paying an extra, roughly 167 pounds per month. So, and that is on top of the basic premium as well. So, if you are calculating anything like that, just bear in mind to add on the original premium as well. Don’t forget that, because again, it really adds to things, but as you can see, if someone can get a refund of up to 90% of that extra of that, 167,000 pounds, that’s a huge, it’s hugely significant. And really, it’s, it’s only fair if you do tell your clients about that because obviously that’s, that’s doing right by your clients.

Kathryn (12:04):
In terms of income protection, it can sometimes be available and it can be a little bit debatable at times because of the fact that people who are in the armed forces, if they are unable to work due to their health, they do get medical retirement.

Kathryn (12:19):
And that can involve a few different things, you know, potentially in terms of like pensions, which is obviously it’s not an area that I’m well-versed in. So, I’m not even going to pretend that I know about that side of things. But there can obviously be some benefits through their employer, but it doesn’t always cover every situation. So sometimes we might want to be putting income protection in place. And again, that’s just really speaking to your client, making sure you know exactly what their employer is and isn’t offering and then they will offer a potential claim and then being very upfront as to what the, when the income protection policy might kick in or not kick in, if obviously it’s already being covered by the employer. So, I’d say it’s sometimes available. But there can be exclusions for occupational related claims, but it isn’t something that’s widely available. In a bit of a kind of like summary in a sense.

Kathryn (13:17):
So, armed forces, it’s a not usual to have a standard exclusion on life and critical illness cover. So, if anybody kind of assumes that that’s not the case, you know, there isn’t like a blanket one there with most insurers to say, if you’re a member of the armed forces, we won’t pay out in the situation for a lot of UK insurers if someone gets life insurance, unless it’s specifically added as an exclusion, then they will be covered. If they do die during their deployment and with critical illness cover, as I’ve mentioned, there might be specific exclusions in there, but it’s not standard. And what’s quite important about that as well is to say, you know, if somebody speaks to you and they’ve said, oh, well I have all this insurance in place, but I’ve joined the armed forces. It’s not going to be, it’s not going to be available to me just to make, maybe take a pause and step back and think, well, actually is, is this new change of occupation actually going to affect the original policies?

Kathryn (14:11):
If the person, when they took out the original policies had no intention of joining the armed forces, they weren’t signing up for it. They hadn’t been, you know, it hadn’t been their career goal, their entire life. They hadn’t just set, taken out the policy in a day later, tried to enlist. Then it’s, it’s quite likely that their original policy is still valid. And what we would want to do is really make sure that it stays in there and that they keep that policy. We wouldn’t necessarily want to jump to immediately trying to arrange, rearrange their cover because you might actually get them worse terms for cover and that wouldn’t be doing right by them. For things like income protection, accident policies, things can be a bit different. So sometimes there are exclusions and standard exclusions on there for people who are in the armed forces or potentially even the amount of time that they spend outside the UK in any given year.

Kathryn (15:00):
So that’s one to be really careful about. If you are reviewing somebody’s cover or somebody’s wanting something like these policies, just double check that though the terms and conditions in the background are really matching with that person’s occupation. With the reserves, so sometimes we do get people from the reserves who come to, to speak to us. They are generally treated in quite a similar fashion to people who are in the armed forces in terms of the life and critical illness cover. What can be really interesting though, is the income protection side of things. What we need to do with people who are in the reserves is really be clear on when a claim will and will not pay out. So, a lot of people who in these, in the reserves often have a full-time job that pays them a salary, and then they’ll get some, some kind of an income from the reserves too.

Kathryn (15:43):
So, what’s really important is making sure that before you arrange that policy for them, that you obviously check with the insurer, check the terms and conditions, check everything everywhere and make sure that you are clear to the client as to when the income protection policy will or won’t pay out. Because if the person is unable to do their reserves job and receive that part of their income, but they can still do their regular job. And then we can sometimes enter a bit of, a bit of a gray, a bit of a debatable area as to when that income protection policy might or might not be able to kick in. So, I said it was going to be short on today. I’ve got a couple of examples for you just for people that we have arranged insurance for. And I’ve, I’ve chosen people who are more that we’ve gone to on the standard market, because I think obviously a lot of people here would be listening are probably going to be people who do access standard markets, obviously in terms of more high-risk occupations, such as bomb disposable.

Kathryn (16:41):
As I say, the person that I spoke to recently, who is a gunner on a helicopter, they’re the kind of people that we are able to spot and get the insurances for, but we just need to go down more specialised routes. And, and that certainly doesn’t mean excessive premiums. It’s just very particular ways that we, we go about things. And the other thing to bear in mind as well for people who in the armed forces or have come out of the armed forces, is that we might be at a situation where people are experiencing things like post-traumatic stress disorder or other mental health conditions, or potentially other conditions such as loss of limbs and, and a number of different things. So, some of you will be aware from listening to this that my colleague, Lindsay, who often does all the editing for this she is my marketer extraordinaire.

Kathryn (17:29):
Her husband was in the armed forces and unfortunately was shot in the line of duty. And I think it was twice in the head he was shot. And he now lives with epilepsy following that event. So, you know, there’s lots of things that can happen for some somebody that in the armed forces and in those, we would then be going back to, or referring back to our medical and our health risks that we’d usually look at. So, in terms of the post-traumatic stress disorder, there are a number of mental health podcasts that we’ve done also done on for people who are living with epilepsy. So please feel free to refer back to those ones. And we do have specifically at Cura as well, some really specific life insurance policies that are available for people with, with stronger mental health conditions, especially people who’ve maybe had a post-traumatic stress disorder after leaving the army.

Kathryn (18:22):
So please do always feel free to reach out to us and we can explain what is and isn’t available, but for these case studies. So, the first one is a person, a man that we helped to get life insurance and income protection. He was in his late twenties and he was a doctor in the army. And what we were doing is some life cover for his mortgage. And we were able to get standard terms for him, and it was level life insurance with 272,000 pounds, over 39 years for around 13 pounds per month. And in terms of the income protection, we did an increasing income protection policy. And by doing that with the increasing version. So that means that they are RPI linked. That means that as, as time goes on, usually annually, the amount that we insure is insured each month in terms of the benefit for the client increases.

Kathryn (19:09):
So does the premium and that’s just to try and make sure that the value of what we’re arranging is maintained because, you know, a thousand pounds in income now is certainly not the same as a thousand pounds in income in 10 year’s time. We’re going back to this person, so we have an increasing income protection policy. It was 2,500 pound per month. The we arranged a deferred period of one year due to the sick pay that was available for the employer and kind of the, the, the limits that you can arrange sometimes with these policies and a claim that was paying all the way potentially to the age of 50. And it was to keep this all-in line with the gentleman’s budget and the premium for that was 33 pounds per month. The next person that I wanted to talk about was somebody who had been deployed for quite some time.

Kathryn (19:56):
So, this was a woman in her mid-forties, and she was in the army and she was based in Brunei and had been for the previous three years. And she was due to return to the UK in about a year’s time. Now she had a desk job. So, what’s interesting about this one is obviously she does have a desk job, so it’s not seen as something, you know, she, she was in a position where she would, she just would not be called to the frontline, but obviously she’d spent quite significant time outside of the UK. So, we start to come in to a little bit of debate in terms of residency and things like that. And for, for this lady, there had also been in the past a diagnosis of hepatitis C that we had to factor in to our research. But for, for this person, we got 250,000 pounds of joint level life insurance with her partner.

Kathryn (20:42):
And it was family protection for each other and their children. And it was over 20 years and it became just under 80 pounds per month for the cover. And that was standard terms. So that is it really for my armed forces update. There are absolutely things, you know, I know I’ve done a very light instruction to this really. There are definitely more risky situations to be talking about, but I just wanted to provide a kind of light overview considering the people that you are you’re most likely to probably speak to over time as a potential client. Next time I’m going to be back with Roy McLoughlin and Tim Smith, who is the Head of Protection at Hannover Re. If you’d like a reminder of the next episode, please drop me a message on social media, or visit the website, practical-protection.co.uk. And don’t forget that if you’ve listened to this as part of your work, you can claim a CPD certificate on the website, too. Thanks to our sponsors, the Octo Members. Thank you everybody.