Bupa plan is ill conceived

THE acronym Bupa has almost become a generic term for private medical insurance, as in: 'My Bupa is with PPP.'

But the company has decided to launch a new scheme that does not offer private medical fees insurance.

HealthCash pays out a pre-set sum when you go into hospital - private or NHS. But it won't foot the bills.

There is a great danger the deal will be snapped up by people who don't realise that it is not a passport to private medical care.

Bupa has been making losses recently and needs to find more subscribers. It has always had the biggest share of the market and the highest prices - an enviable position.

After resisting the move to cut-rate plans for a while, it eventually followed its rivals and now has various slimline versions, including one that kicks in only when NHS waiting lists are over six weeks long.

The new policy costs a fraction of those that pay the medical bills for you to go into a private hospital. For instance, a 35-year-old would pay around pounds 13 a month for waiting list cover, pounds 30 for provincial cover and over pounds 60 a month for full cover in London. The new cash policy would cost pounds 3.90 to pay out pounds 30 per night spent in hospital.

But I don't see the point. Most people who are employed find a short spell in hospital actually saves money - no fares, no food bills and no going out on the town.

Meanwhile, anyone who is self-employed really needs more substantial insurance cover to replace the bulk of the lost income.

The hospital cash cover would be neither here nor there.

Bupa is devaluing its currency by launching this plan, and although it doesn't cost much per month, it is no substitute for private medical insurance.

LAST month, I criticised the Inland Revenue over the blizzard of green forms to people who had claimed gross payment of bank or building society interest.

Each of these innocent- looking forms came without a covering letter to explain what it was all about - checking you really were entitled to escape tax being taken off interest at source. There was no leaflet to help you fill it in and no warning of what might happen if you threw it in the bin - that the interest payments could suddenly have the tax taken off just like the old days.

Amazingly, the Revenue agrees that form RU6(M) was not its finest hour. It is being redesigned with more explanation of its objectives and there will be a leaflet to help people fill it in. This is just as well for the form is being fired off at non-taxpayers - mainly the young, married women and the elderly - and many of these will have been out of contact with the Revenue for so long that form-filling is a forgotten art.

The Revenue really does seem to be trying to be more user-friendly.

It would be churlish to say that it would have been nice if they had got it right first time.

WARNINGS that with- profit bonds are not quite what they have been cracked up to be by some of the people selling them have already hit home.

These bonds, which use a lump sum to buy into the same investment pool as endowment policies primed with monthly payments, were promoted as being almost as safe as a building society account. They have no definite lifespan, unlike an endowment policy, but are designed for medium-term investment.

The life companies declare bonuses every year, and once attached to a policy, they cannot be taken away. But it is different with bonds.

For lurking in the fine print is the proviso that a 'market value adjustment' would be used if investors headed for the door when equities were slipping while taking more than their fair share out of the pool because of the bonuses.

This is happening now with Eagle Star, Norwich Union and the Prudential, among others, making 'adjustments'.

The rationale behind this is to give a 'fair' portion of the fund to those reacting to market conditions.

Otherwise, endowment holders who opt out for reasons connected with their home or personal circumstances, rather than the state of the stock market, would be subsidising those who job in and out.

The regulators were right to get upset about the way these bonds were sold. But the criticism should go further: they are inherently unsatisfactory investments.