Health insurance ain't cheap. It should be viewed as a luxury, not a necessity, given the NHS provides comprehensive medical treatment to anyone who needs it, regardless of their ability to pay.
But if you decide to get insurance, you need to know exactly what you've bought. This guide will take you through what health insurance covers, what to look out for, 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 such as tonsilitis or appendicitis. As we have the NHS, health insurance should not be viewed as a compulsory. You can get it by either buying it yourself or if your employer has a scheme as part of the benefits it offers.
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
1Do I really need it?
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, so make sure you NEED it before you buy: Full info:
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 £5,000 of any treatment. This makes your policy very cheap - just a few pounds a month - but if you have serious problems, then you have some cover to fall back on, limiting your exposure to major problems.
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.
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.
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.
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.
2It 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. Full info:
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.
3Your premiums will increase over time
Even though there's competition in the health insurance market, the sad fact is that whatever policy you choose, your premiums are likely to rise each year above the rate of general inflation. Full info:
As methods used to diagnose conditions become more advanced and are used more frequently, doctors can identify conditions earlier and patients can be treated more quickly. The costs of these advances are often passed on to policyholders.
Also, as you get older, you're more likely to need treatment and premiums increase to reflect this. A 70-year-old's premium is likely to be up to three times higher than one for a 35-year-old.
4Lots 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 inclusions and exclusions, such as a trip to A&E, normal pregnancy and cosmetic surgery. Full info:
What's 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's 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
Buying the right cover
If you've read the above and you have decided that health insurance is for you make sure you get the right cover at the right price.
There are two ways insurers will decide your risk; by asking you to fill out a full questionnaire or automatically excluding 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 route to cover 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 if you don't have medical conditions as you can easily prove clean health record and can gain wider coverage.
Pre-existing conditions? Take the auto-exclusion route
if you have pre-existing medical conditions the best route to getting cover 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.
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 PMI Partners*.
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.
Health insurance best buys
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 September 2014):
£ per year
For a healthy, non-smoking 70-year-old man (correct as of September 2014):
£ per year
Best for discounts. Full info:
If you have spare cash burning a hole in your pocket, you'll get a discount with Axa if you pay for the whole year upfront. And if you pay by direct debit, you get two months free for the first year with Aviva and Saga will give three months free when you pay by monthly direct debit.
Another provider to give a discount is WPA giving 25% off your premium in the first year, 15% off in the second and 5% in the third. Exeter Family Friendly gives a 10% discount if you're a non-smoker and have a healthy BMI, although providers will generally have factored that into the premium they offer you.
Best for joint policies. Full info:
On the whole, it costs little more to get your partner on the same policy but PruHealth actually lowers premium with an additional person.
Best for extra perks. Full info:
You may have seen ads with Jessica Ennis-Hill and Jonny Wilkinson telling you to get benefits from your medical insurance even if you don’t use it.
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.
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. They include:
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.
You can limit your hospitals
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.
You can make fewer or no claims
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.
Would it be better to self-insure?
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.
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How do I claim?
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.
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 seperately?
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 competive 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.