Health Insurance

Private health insurance is an increasingly useful financial investment in an era of long NHS waiting lists. It provides reassurance that treatment is available promptly and the policyholder has a guarantee that healthcare costs will be covered if they are injured or taken ill. While private hospitals are generally not equipped to act as emergency wards, private healthcare will cover medical costs, ensure that you receive care quickly and often allow you to choose where you receive it.

The cost of a private health insurance plan depends entirely on who the policy is for (family, couples, and other combination policies are available), the comprehensiveness of the cover and the insurer that you choose. As with many types of insurance, premiums depend on the chosen 'level' of care, the excess fee and the no-claims benefit. In the workplace, some companies offer private health insurance as an employment perk, taxable only above a certain threshold.

Medical History

Some insurers and policies require you to fill in forms about previous and current illnesses and medical problems. They may also ask for GP contact details. Honesty is crucial, and you must bring recurring medical conditions to the attention of the insurer. They do not necessarily preclude you from taking out a health insurance plan. If you don't give the insurer the facts, any future claim you make could be invalid.

When is Health Insurance Relevant?

In most cases, premiums become more expensive as you get older, so the earlier you start investing, the better. In some cases, insurers will not accept new customers of a certain age. The Association of British Insurers states: "They are more likely to need and receive medical treatment, which means that private medical insurance premiums will usually increase with age to reflect this."

Many people opt to start their plans as part of their jobs, when they get married or when they have their first child. It is possible to take out a family insurance plan. Anyone leaving the UK on a long-term basis (to work or to travel) should certainly consider health insurance, both for peace of mind and for a more hassle-free trip.

Check Before you Buy

As with all financial commitments, it is essential to select the provider who best suits your specific needs as well as your budget. A relevant policy is more valuable to you than a cheap one that doesn't cover you for what you need. Buyers should read the small print of the policy carefully, assessing which hospitals the insurer deals with and the criteria by which they have been selected. Options to reduce your premium (such as paying an excess fee or opting for less comprehensive cover) should also be investigated. Buyers should also remember that their premiums will increase every year in line with medical inflation, and that some insurers offer fixed-rate premiums.

Policy Options

In the United Kingdom, considerable diversity exists in the health and medical insurance market. The following types of plan are typical in the UK market.

Private Medical Insurance (PMI)

Private Medical Insurance provides a fund for your consultations, your tests and any operations that you might need. You will benefit from a private room and a greatly reduced waiting list. Furthermore, you could choose where you would like to be treated and when. PMI plans are generally taken out as a annual contract with various payment options. You can reduce your premiums by making sure you have an excess limit in place. This means that you will be eligible to pay the first £100 or thereabouts of any claim that you make.

You are able to take out PMI as an individual, as a married or unmarried couple, a single parent or a family. The premium will increase each year due to medical inflation and payments will increase with age.

Insurers generally offer three different levels of private medical insurance: budget, standard and comprehensive packages.

Budget plans usually limit payouts to a set level and also for specific purposes, excluding cover for some purposes (e.g. physiotherapy). They also limit the range of hospitals that can be visited.

Standard plans are generally more comprehensive, and will often cover limited outpatient treatment, very limited complementary medicines, and some ambulance services. These policies also limit where treatment takes place, often top hospitals are not included in the cover.

Comprehensive, top of the range plans are likely to pay out for extras such as home nursing, ambulance services, complementary medicine and full treatment costs. They will open up a great range of hospitals, and in some cases will even include dentist and optician fees and extend to international cover.

The exact extent of what is covered (and which exact medical conditions) under each level of plan will depend on the insurer.

Cash Plans - General

Cash plans are often cheaper than standard health insurance policies, but they do not speed up treatment in general, or allow access to better health insurance facilities. Cash plans are generally low-cost health insurance plans that will provide cash for the policyholder's medical expenses. Cash Plans are available for both individuals and families.

Cash plans require the policyholder to make a monthly payment to the insurer. The insurer then holds or invests this capital into a central reserve of money or a trust fund. If a policyholder has to spend time in hospital, the policy will provide a cash payout that the policyholder can choose how to spend.

Depending on the plan, other medical costs may be included such as treatment, dental care, optical care, NHS prescriptions and complementary medicines This depends on how comprehensive the cover is. Conditions that you suffered from before you took out the policy will almost certainly be excluded

Some insurers will not allow you to make claims until you have had the policy for a set period of time. Insurers may also cap the limits that they pay out, meaning that you may have to pay some level of medical costs even though you are covered. Some insurers will also cap the maximum hospital stay covered, and will not pay out after a certain length of time. Furthermore, some cash plans are only effective for a single claim, and others cover nothing beyond hospital fees. Some cash plans also have high excess fees.

Cash Plans - The 6 Week Plan

Six-week plans, also known as six-week waiting plans, are a type of cash plan that will only provide private treatment if an NHS waiting list exceeds six weeks. There are a variety of different types of policy that operate in a similar way, and they are often very competitively priced. As with any health insurance plan, it is crucial to know exactly what you are covered for before taking out the policy. Some plans have been criticised for misleading advertising so check carefully which conditions are excluded.

The Health Trust Fund

This is a more recent package designed to replace traditional health insurance schemes. This type of plan uses the UK trust fund laws that permit low cost cover, comprehensive access to medical facilities, no excess payments, no automatic premium increases and no age loading. But beware, the Financial Services Authority does not yet regulate health trust funds.

Expat Insurance

Expat insurance is aimed at people who are working or living abroad for an extended period of time. This type of plan is generally paid annually in advance and the cover can then be reduced depending on budget. Repatriation or emergency evacuation benefit is a common feature of 'expat insurance' policies, although some insurers will only provide this cover if the country in which the policyholder has fallen ill/been injured does not have the facilities for treatment.

Exclusions

Unfortunately, some conditions will exclude patients from holding health insurance in almost all cases. In some cases, the insurer will deny insurance altogether, in others (e.g. asthma) they will refuse to pay for any treatment of or related to the condition.

The Association of British Insurers include the following: 'Drug abuse, self-inflicted injuries, out-patient drugs and dressings, HIV/AIDS, infertility, normal pregnancy, cosmetic surgery, gender reassignment (also known as sex change), preventive treatment, kidney dialysis, mobility aids, experimental treatment, experimental drugs, organ transplant, war risks, injuries arising from dangerous hobbies (often called 'hazardous pursuits').'

'Pre-existing conditions' refers to a medical condition affecting the would-be policyholder that has already been diagnosed before taking out health insurance. Usually, the insurer will exclude cover for any condition (or complication resulting from it) that the policyholder has had in the last five years. Although some insurers will cover some conditions if the policyholder is found to be free of them, incurable diseases are likely to always remain excluded.

Other Catches

Depending on the type and comprehensiveness of policy that you have, insurers may well impose a limit on the level they will pay out for each type of medical treatment. For instance, they may pay for a set number of hospital nights or a set number of physiotherapy sessions, and when this number is exceeded they will no longer pay out. Higher premiums generally provide higher limits or unlimited cover.

How to Claim

It is important to know the individual claim process favoured by your insurer. Generally, this will mean establishing your problem or condition, and obtaining a quote for treatment in advance. At this point check whether or not your insurer is willing to pay the costs of treatment at the outset. Some insurers will prefer you to make the payment and claim the money back from them.