Health insurance ain't cheap. It should be viewed as a luxury, not a necessity, as the NHS provides comprehensive medical treatment to anyone who needs it, regardless of their ability to pay.
If you decide to get cover, you need to know exactly what you've bought. This guide explains what health insurance covers how to buy and where you can get the best deals.
In this guide
What is health insurance?
Health insurance, also known as private medical insurance, covers the cost of private medical treatment for ‘acute’ medical conditions - diseases, illnesses or injuries likely to respond quickly to treatment.
People typically buy health insurance for three reasons; choice, speed and quality of facilities. Policyholders avoid NHS waiting lists. They receive faster consultations and private, usually more comfortable treatment but before you decide whether or not to buy it, ask yourself, do you need it?
Health insurance can cover the cost of private day patient surgery, tests and hospital accommodation but it may excludes trips to a GP, accident & emergency or an organ transplant. See inclusions and exclusions for more.
Health insurance: Need-to-knows
You may not need health insurance
There are a number of alternatives to health insurance. They include self-insurance, cash plans, workplace schemes and the NHS.
There are also a number of policy restrictions, such as cosmetic treatment or injury related to dangerous hobbies, so make sure you NEED it before you buy.
Can I self insure instead?
Instead of paying, say, £300 a year to an insurer, pay £25 a month into a high interest savings account. Should you need any minor treatment or consultations, simply dip into your own insurance fund. Stay fit and healthy and you get to keep your “premiums” with the interest on top.
If you do decide to pay as you go by self-insuring, for additional peace of mind you can hedge against any serious problems by buying an insurance policy with a high excess (the amount of each claim you agree to pay). Naturally, the higher the excess, the lower the cost.
For example, rather than buying an expensive cover-all policy with an excess of £50, you could agree to pay the first £1,000 of any treatment. This would significantly reduce your premiums and if you have serious problems, then you have some cover to fall back on, limiting your exposure to major problems.
Can I use a healthcare cash plan rather than buying health insurance?
Healthcare cash plans are very different to health insurance. They include dental and optical care as well as alternative treatments. Here, you pay a few pounds a month, then if you need to pay for NHS or private treatment, you can claim some of the cash back, up to an annual maximum limit.
For full details, read the Healthcare Cash Plans guide. Think of it as a good added extra to NHS care, rather than an alternative to health insurance
I'm already covered under a workplace scheme. Do I need to buy cover?
If you have a workplace scheme, and it is right for your needs, you are unlikely to need to buy cover. Some employers may pay for your health insurance for you or your whole family, although this is classed as a 'benefit in kind' so you'll pay tax on the cost. But it can still be cheaper, even if you pay yourself, because firms' bulk-buying power means they can negotiate big discounts.
So find out the cost and compare it to the cheapest plans. If your employer doesn't have a scheme, see if your partner's company will allow you to join it.
Can I just use the NHS?
Health insurance works alongside the NHS, so you won't lose your entitlement to NHS treatment just because you have health insurance. If you really don't need to avoid waiting lists, or won't benefit from faster consultations, consider sticking with simple NHS treatment.
What restrictions will I face if I buy health insurance?
There are a number of restrictions to health insurance cover. If these make the product less attractive, consider going without.
- It's possible you'll be put in a private patient unit within an NHS hospital, but you could also end up on a NHS ward rather than a private room.
- If you get a serious illness, you won't necessarily receive treatment more quickly by being covered by a health insurance policy than you would under the NHS.
- You won't have unconstrained choice over where you are treated, or who you are treated by. When you buy your policy, typically you'll choose a hospital list which will determine where you can be treated. The broader selection of hospitals you choose, the higher your premium will be.
- You won’t be refused cover if you have a disability, but as with other pre-existing conditions, your insurer might not include cover for treatment needed as a direct result of your disability. But under the law, the provider must act reasonably.
- You’ll need to give all relevant information about your disability and, if your policy doesn’t cover pre-existing conditions, any existing medical condition causing disability or arising from it will not be covered.
It may not cover pre-existing conditions
Health insurance isn’t designed to cover you for every health issue that might occur. It covers treatment for acute conditions that start after your policy begins - so you may still need treatment via the NHS in some cases.
Some insurers may provide cover for longer-term (chronic) conditions, but you’ll need to check the policy to see what you’re covered for.
Your premiums will increase over time
Even though there's competition in the health insurance market, whatever policy you choose, your premiums are likely to rise each year above the rate of general inflation. As methods for diagnosing conditions become more advanced, the costs of these developments are often passed on to policyholders.
In addition, as you get older, you're more likely to need treatment and premiums increase to reflect this. For example, a 70-year-old's is likely to pay three times more for cover than one for a 35-year-old.
Lots of treatments are NOT covered
Your individual policy will outline exactly what you are and what you aren't covered for. There are some pretty standard exclusions, such as a trip to A&E, normal pregnancy and cosmetic surgery.
What is usually covered?
What is covered under a health insurance policy will largely depend on its terms and conditions but there are some features which are commonly included.
Tests and surgery as an inpatient or day patient
Policies include lots of work that can be done while you are an inpatient or a day patient. A day patient is admitted to a hospital but does not stay overnight and an inpatient typically stays overnight. Tests for inpatients and surgery for inpatients and day patients are usually included.
Hospital accommodation and nursing care
If you need to stay in hospital and receive nursing care this will be included in most policies.
Outpatient tests, consultants and therapy
While not usually included as standard, outpatient tests, consultations and treatments with a specialist and therapy such as physiotherapy and complementary therapy may be included in some policies.
Acute stages of chronic conditions
While chronic conditions are largely excluded, some policies cover their acute stages. This means that some treatments and specific drugs for cancer may be included but will usually attract a higher premium. Palliative care, care for patients who are suffering from serious long-term illnesses, is usually excluded.
As well as the above many policies also include exclusive drugs which are unlikely to be available on the NHS. For the drugs to be used, they need to be approved by National Institute for Health and Care Excellence.
What is usually excluded?
While chronic conditions are excluded, it is also worth noting that a visit to a GP, a trip to accident and emergency or any injuries from dangerous hobbies, such as skydiving, will also not be covered. Below is a list of the other most common exclusions.
Gender reassignment (sex change)
Mobility aids, such as wheelchairs
Prescription drugs and dressings, after leaving hospital or as an outpatient
Deliberately self-inflicted injuries
Experimental or unproven treatment or drugs
How do I apply for cover?
If you've read the above and health insurance is for you, make sure you get the right cover at the right price.
There are two ways applying for cover; either fill out a full questionnaire or automatically exclude conditions you have been recently treated for.
No conditions? Take the questionnaire route
If you don't have a pre-existing medical condition, the best option is to fill out a detailed medical questionnaire. This is known as full medical underwriting.
The insurer will ask you for full details of your medical past and may write to your GP for extra info. Give as much detail as possible - if you don’t, there may be gaps in your coverage or, in extreme cases, your insurer will cancel your policy. If you’re not sure whether to mention something, live by the rule that it’s best to be completely open and honest.
This can be more time-consuming but its worth it as with a clean health record you can gain wider coverage.
Pre-existing conditions? Take the auto-exclusion route
if you have pre-existing medical conditions the best option is the auto-exclusion route, also known as moratorium underwriting.
Moratorium underwriting automatically excludes any conditions you’ve sought advice for, received treatment for, taken medication for or had symptoms of in the past few years. For most insurers, this is five years, but it can differ.
These conditions may later become eligible for cover, but only if you haven’t had any symptoms or received treatment for about two years. If you claim, your insurer may ask for medical notes to decide if your claim can be accepted.
This cover's quicker to apply for and suits people who have pre-existing medical conditions as they may be able to get wider coverage further down the line.
Cutting the cost of cover
The price of cover depends on a number of factors. Obviously if you want all the bells and whistles, you’re going to pay more. If you want a more standard policy, which is likely to have many exclusions, then it’s going to cost you less.
As with any other type of insurance your premium will go up if, and when, you claim. However, there are still ways to cut down your costs.
You can limit your hospitals
You can make fewer or no claims
You can self-insure
You can lower monthly payments by agreeing to pay an excess on each claim. Most of the providers offer this as an option. A similar idea is a ‘shared responsibility’ policy, offered by WPA and others, where you agree to pay a percentage of each claim up to an agreed amount.
Other than Axa and Exeter Family Friendly, the insurers all give you a choice of hospital. If you're outside London, you can reduce your payments if you're willing to have a more limited choice of hospitals. But Londoners lose out, as you normally have to upgrade to get care in the capital, as many of the biggest private hospitals are based there.
The point of buying health insurance is to make a claim when you need it. But you can keep future premiums down with some providers if you don’t make a claim.
Self-insurance is an option. If you're young, fit and don't smoke, but want the peace of mind of health insurance, instead of whittling away your hard-earned cash on a pricey policy, you can become your own insurer.
Instead of paying hundreds of pounds every year, you could put for example, £30 a month into a high interest savings account (see Top Savings Accounts). Then, if and when you need any minor treatment or consultations, you can dip into your own insurance fund. If you remain fit and healthy, then the added bonus is you’ll keep the money, plus the interest it’s earned on top.
Health insurance: Best buys
Now you know how health insurance works and what to watch out for, it's all about finding the best deal for you. Before you start you need to decide whether you need advice or not.
Check out price comparison sites for the best deals
Health insurance can be difficult to understand, so buying via comparison sites won't suit everyone. Using a comparison site may be a good place to start your research - but if you're not sure what you're, buying contact the insurer directly or use a broker.
Confused.com*, Compare The Market and Gocompare all host a number of health insurers on their sites, as does specialist provider Family Insurance Services*.
Contact a broker if you need advice
If you’re not confident making the decision, you might want to enlist the services of an independent financial adviser.
Your best option will be to find a member of the Association of Medical Insurance Intermediaries (AMII). They provide independent, specialist advice on individual and group private medical insurance policies.
Some insurers, such as The Permanent Health Company, only offer quotes through financial advisers and not online, which is something to take into consideration.
How do they stack up?
We got quotes from the big players in the market to see who comes out on top. To make it fair, all quotes have a zero excess (so you pay nothing towards a claim), unlimited outpatient care (these depend on what the doctor charges) and full cancer treatment coverage.
Health insurance policies aren't easy to compare, so we're never going to be able to provide a like-for-like comparison. Some areas of coverage are standard with some providers, optional with others; while some have discount offers for the first year or rewards programmes.
For a healthy, non-smoking 35-year-old man (correct as of June 2015):
|Provider||£ per year|
For a healthy, non-smoking 70-year-old man (correct as of June 2015):
|Provider||£ per year|
Best for discounts. You'll get a discount with Axa if you pay for the whole year upfront. If you choose to pay by direct debit, you get three months free for the first year with Saga. Choose to go with Bupa (until 30 June) or WPA and you can get two months free (in the first year only). With WPA the plan must start before 1 Nov. 2015.
Best for joint policies. On the whole, there is usually no one winner. It does cost that little more to get your partner on the same policy though the combined premium usually works out less that taking out two separate policies. Until 30 Sept. WPA can let you can add your partner free (for the first year only). The second oldest person on the policy will be the one to benefit from free cover.
Best for extra perks. The PruHealth Vitality Plus scheme offers free cinema tickets and gym membership discounts but don’t chose a product based on the freebies - get the coverage you need for the price you can afford.
As with everything, this will depend on your insurer. But they all have similar processes which you'll need to follow:
- Get a referral from your GP, contact your insurer to register the claim and make sure you’re covered for it. Some insurers prefer you to make the claim over the phone or by post, and others via email, which is considered to be quicker and more secure.
- You’ll usually be asked for a membership number (make sure you have this to hand), the date of the treatment you’re having, details of the procedure, the charge for each service such as the consultation, and the total of all the charges.
- Ensure your GP refers you to a hospital from your chosen list, so you’re covered.
- Make sure you keep your insurer up to date throughout the process, for example, after you’ve seen the specialist.
- You shouldn’t be sent an invoice for the treatment if you’ve followed the correct procedure, your insurer should sort this out for you. If for some reason you do, you’ll need to get in touch with the insurer.
Health insurance: Quick questions
I've heard of private medical insurance, is it the same thing?
Health insurance is often referred to as Private Medical Insurance (PMI), but make sure you don't confuse it with other types of insurance such as healthcare cash plans, income protection and critical illness.
What's a healthcare cash plan?
Healthcare cash plans are very different to health insurance. They include dental, optical and alternative health too. Here you pay a few pounds a month and if you then need to pay for NHS or private treatment, you can claim some of the cash back up to an annual maximum limit.
For full details, read the Healthcare Cash Plans guide. Think of it as a good added extra to NHS care, rather than an alternative to health insurance.
I think I might have health insurance through my employer, do I need cover separately?
Some employers may pay for your health insurance for you or your whole family, although this is classed as a 'benefit in kind', so you'll pay tax on the cost. But even if you need to pay yourself, it can be cheaper, as firms can get big discounts buying in bulk.
So find out the cost and then compare it to the cheapest plans. If your employer doesn't have a scheme, see if your partner's company will allow you to join it.
What happens if I decide against the policy?
Most policies will have a 14-day cooling-off period if you change your mind. You should get a full refund unless you've made a claim.
How easy is it to switch insurers?
Switching insurers can be tricky as health problems can tie you to your existing insurer. If you're thinking of switching to take advantage of more competitive premiums, remember you might lose cover for any conditions you've developed since you started your policy.
If you do decide to switch and you pay for your policy annually, it's best to switch when you're coming up for renewal. If you do it at another time, check if you'll lose any payments. Check to see what you're still covered for, and what's excluded, before you make a decision.