BUPA, the UK's largest medical insurer, has launched a revolutionary product that freezes premiums for either five or ten years.

The "fixed price" product will offer policyholders stability in a market which has suffered from rampant inflation.

Premiums in the market have risen 15% a year on average for the past decade.

The product will be sold both direct and through intermediaries, although there is no difference in the price of premiums.

"This is a major step towards establishing longer-term relationships with customers," said Stephen Flanagan, BUPA membership's sales director.

The product is based on BUPA's most popular product – BUPACare – and gives the same benefits as Scale C of that product.

The initial prices will stay the same until March 31, 2000, when the success of the product will be reviewed.

Initial commission is 35% of the first year's subscription for the five-year option, 45% for the ten-year option and nine per cent of total subscription for the lump sum option.

There are two payment options: a fixed monthly payment which is guaranteed to stay the same throughout the chosen period or a lump sum option which offers savings on the fixed monthly rates.

There is no lock-in clause and a member can leave at any time without incurring a penalty.

People who choose the lump sum payment option will get a pro rata penalty.

Customers will be able to reduce their premiums by taking out excesses whereby they pay the first £100, £250 or £500 of the total amount claimed in a year.

BUPA fixed price cover with £100 excess

Age Monthly rate fixed for five years Monthly rate fixed for ten years Lump sum cover for five years Lump sum cover for ten years
30 £50.66 £62.27 £2,530 £5,287
40 £56.47 £69.42 £2,824 £6,499
50 £72.16 £88.69 £3,612 £8,295
60 £97.34 £119.64 £4,861 £11,913
All rates include IPT at five per cent. The current monthly rates for BUPACare Scale C with £100 excess are 30: £42.21; 40: £47.06; 50: £60.13; 60: £81.11