Rebecca | Edited by Johanna
Updated April 2017
Private health insurance should be seen as a luxury, not a necessity, as the NHS provides comprehensive medical treatment to anyone who needs it, regardless of their ability to pay.
However, if you do decide to get this cover (also known as private medical insurance), there are ways to keep the cost down and still get a good policy. This guide explains how private health insurance works, how to buy it and what to watch out for.
In this guide...
Health insurance, also known as private medical insurance or private medical insurance, covers the cost of private medical treatment for ‘acute’ conditions – diseases, illnesses or injuries likely to respond quickly to treatment.
There are lots of different plans to choose from and while basic policies cover essential treatments while more comprehensive policies may include specialist therapies and complementary medicines such as acupuncture or chiropody. To sum up:
You pay a monthly sum to the insurer and it pays out for your essential treatments such as hospital care and surgery.
It's also possible with some private medical insurance policies, for example, you can choose the hospital you go to while with others certain treatments will be included, so it's important to make sure that if you're buying a policy it's the right one for you.
What is typically included under a private health insurance policy?
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 as an inpatient or day patient
Policies include treatment which 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 day patients are usually included.
- Surgery as an inpatient or day patient
Surgery for inpatients, which usually means you're in over night, and day patients, those who are treated during the day and don't stay overnight, 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, those which last a long time and often have no known cure, are largely excluded, some policies cover their beginning stages. This means 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.
- Many policies also include exclusive drugs which are unlikely to be available on the NHS, such as herceptin for treatment of some kinds of breast cancer. For drugs to be used, they need to be approved by the National Institute for Health and Care Excellence.
What is typically excluded from health insurance?
Chronic conditions are excluded as standard while visits to a GP, trips to accident and emergency or injuries from dangerous hobbies, such as skydiving, may also not be covered. Below is a list of the other most common exclusions.
- Drug abuse
- Normal pregnancy
- Gender reassignment (sex change)
- Mobility aids, such as wheelchairs
- Organ transplant
- Dental services
- Prescription drugs and dressings, after leaving hospital or as an outpatient
- Deliberately self-inflicted injuries
- Cosmetic treatment
- Experimental or unproven treatment or drugs
- Kidney dialysis
- Injuries due to acts of war
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 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 an 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.
What is a chronic condition?
Chronic conditions, such as arthritis, asthma or cancer aren't covered by private medical insurance. These are generally defined as something that:
- Needs on-going or long-term monitoring through consultations, examinations, check ups, and/or tests.
- Needs ongoing or long-term control.
- Requires your rehabilitation or for you to be specially trained to cope with it.
- Continues indefinitely.
- Has no known cure.
- Comes back or is likely to come back.
What's a moratorium plan and why is it cheaper?
Can I switch and save?
If you already have a health insurance policy, and you find a cheaper quote elsewhere (make sure the cover is at the same level), all you need to do is set up the new cover to start saving.
However, unlike other types of insurance, it can be tricky to switch and save with health insurance. This is because existing health problems can tie you to one insurer and the cover gets more expensive as you get older.
Therefore, before rushing to switch and save always check your current policy as it may be better value.
Will a policy include my children and partner as well?
If you want to add your children or partner to your policy, family policies are available. You can also buy an individual child's plan, although these are less common.
They are designed to cover acute, short-term conditions, in the same way that individual adult plans are, although some policies won't protect children for certain conditions or will only cover them for inpatient and outpatient hospital treatment – so it's always worth double checking the policy before you buy.
Make sure you know what your family's needs are, then make sure the policy you're interested in matches up. And remember – as most children's treatments are free on the NHS the amount you can claim for is limited.
Also be aware that some hospitals won't admit children so before you buy check the hospitals allowed in the policy will treat your children.
How do I pay?
How you pay for any treatment depends on your insurer, but most have similar processes.
First you'll need a referral from your GP for the treatment. Then check with your insurer to register the claim and make sure you’re covered for it.
You’ll need to give details such as a membership number, the date of the treatment, details of the procedure and the charge for each service and the total of all the charges.
Your GP will need to refer you to a hospital from a chosen list approved by the insurer, and throughout the process you need to keep your insurer up to date.
Can I use a healthcare cash plan rather than buying health insurance?
Healthcare cash plans are very different to health insurance. They cover regular, everyday treatments such as dental, optical and physio care as well as some alternative treatments such as physiotherapy, stays in hospitals and sometimes even massages.
Here, you pay a monthly fee to an insurer then if you need to pay for NHS or private treatment you pay upfront, and can claim some of the cash back, up to an annual maximum limit.
For full details, read the Cover for Routine Healthcare Costs guide.
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 extra cover. Some employers may pay for your health insurance for you and your whole family, although this is classed as a 'benefit in kind', so you'll pay the tax on it.
But this can still be cheaper, even if you pay the whole lot 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, your partner's company may allow you to join it.
What's the difference between health insurance and critical illness?
Health insurance is very different to critical illness cover. Health insurance covers the cost of private medical treatment for ‘acute’ medical conditions – diseases, illnesses or injuries likely to respond quickly to treatment.
But with critical illness, you're paying to cover specific serious illnesses. If the worst happens and you get one of the illnesses listed in your policy, you're then paid a tax-free lump sum in a one-off payment and you can use this however you like, for example; to put towards mortgage payments.
Health insurance covers the cost of private medical treatment and people who buy it typically do so because they receive faster consultations and private treatment, which can be in a private or NHS hospital.
While it can cover the cost of private day patient surgery, tests and hospital accommodation, you wouldn't be able to use it if you were taken to accident and emergency.
Here are nine need-to-knows to help you decide if it's right for you and where to find the best cover at an affordable rate.
The UK is one of a handful of countries in the world which providers people with free NHS treatment at the point of service covering so paying for private healthcare is a luxury not a necessity.
There are also a number of policy restrictions with health insurance, so even if you have cosmetic treatment, accident and emergency treatment, or an organ transplant, for example, you won't be covered, so make sure you NEED it before you buy.
Self-insuring could be a better option than private medical insurance and you'll keep the cash if you don't claim
If you're young and healthy you might not need health insurance and instead of paying £300 a year to an insurer, pay £25 a month into a high-interest savings account or into an interest-paying current account.
Should you need any minor treatment or consultations not available on the NHS, or you want a faster service, simply dip into your own insurance fund. Stay fit and healthy and you get to keep your 'premiums' with the interest on top.
However, remember that treatment for some conditions, such as cancer, can cost hundreds of thousands for private healthcare so in some situations it could be worth paying for private health insurance, if your policy covers the illness.
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, such as cataract surgery – and 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.
Health insurance premiums aren't set at the price you paid when you first took them out so the price will rise over time and usually on an annual basis.
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 is likely to pay three times more for cover than a 35-year-old.
On top of this remember that most health policies won't accept you if you have pre-existing conditions so to remain covered for a condition you have, it may be better to stick with your current insurer.
Many insurers will give you discounts if you pay in certain ways such as if you pay by monthly direct debit or an annual payment.
For example, AXA PPP will give you 5-10% off and Saga* will give you a 7.5% discount if you pay for the whole year upfront.
Only go for a policy if it works for you, no matter how good the discount is – if the cover isn't right there's no point buying it.
Some insurers will charge you less if you can prove you can stay in good health with regular exercise and healthy eating.
With Aviva’s Healthier Solutions, for example, you can save up to 15% if you renew and remain in shape. When you sign up you'll be asked to fill in a health questionnaire and from this given a score on your overall fitness. If you can improve on this, you'll be able to get the renewal discount.
Vitality Health (previously called PruHealth) has a similar plan and offers cashback if you can show you're leading a healthy lifestyle. However, be aware that you might save more by switching providers).
Perks such as cheap gym cover and cinema tickets can be great but they're not the reason to buy private medical insurance
There are also other perks on offer such as discounted gym membership which can be a winner as not only could your monthly gym fees go down, by 50% with Vitality Health for example, you'll also have the benefit of the health insurance policy which you pay for.
It's not just gym discounts either, the Vitality Health scheme also offers free weekly cinema tickets to those signed up to its health insurance plan. However, as with all of these sweeteners, never choose a product based on the freebies and get the coverage you need for the price you can afford.
Not to be confused with living the high life during the festive period or a long afternoon at the local all-you-can-eat buffet, an excess – in the insurance sense – is the amount you pay towards any claims you make.
For example, if your excess is £100 and you get a bill of £300 – you'll pay the first £100 and the insurer will stump up the rest. The larger the excess the cheaper the premium. But be careful when picking one as you need to make sure you can afford to pay it.
Insurer WPA, for example, offers a ‘shared responsibility’ plan where customers, who choose the Premier or Elite plan, pay up to 25% of any claim up to an agreed limit. If you choose the shared responsibility option, a discount is applied to cut the premium and be as much as 50% off.
The insurer CS Healthcare runs a similar scheme and customers pay 15% of each claim per year, up to a maximum of £250 per person, per year, after which the insurer will pay 100% of each claim.
Not the multi-coloured sweets, we're talking about pick and mix in the insurance sense, where you can create your own policy to fit your needs and budget.
Many providers sell cheap, basic plans where you can add-on extras such as extra cancer care or outpatient treatment.
For example, with the premier policy from WPA, you can add up to £500,000 emergency cover abroad for £1.28 per month.
You can also cut the cost by restricting when you use the policy. Several insurers will lower your premium costs if you choose what's called a 'six-week option'. This means if the waiting time with the NHS is six weeks or under, you'll be treated with the NHS. If it's more you'll be eligible for private healthcare via your health insurance policy.
If I only go to one hospital will it be cheaper?
Most insurers will give you a choice of hospitals to go to but you can usually reduce your payments if you're willing to have a more limited choice of hospitals.
What about a no-claims bonus?
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. For example, VitalityLife pays a no-claims discount of up to 65% per year.
If you're thinking about buying health insurance, it's all about finding the best deal for you – cheapest doesn't necessarily mean best but that doesn't mean you can't cut the cost once you've decided what you want. (If you want to know how health insurance works and what to watch out for, read our tips above.)
As prices rise on an annual basis it's always worth checking every year if you can get a cheaper deal by switching.
Using a comparison is a good place to start your research as long as you haven't got any pre-existing medical conditions (if so, see a broker). With a comparison site you can get a number of quotes from a wide range of providers which will give you a good benchmark plus it could be cheaper than you'll be offered by a broker.
Confused.com*, MoneySupermarket.com*, Compare The Market and Gocompare all host a number of health insurers on their sites as does specialist provider Assured Futures*. If you know of any others we should be including please let us know.
Once you've got a benchmark quote from one of the comparison sites, see if a broker can beat it.
Brokers are not only great if you want advice on what policy to pick, but they often have connections with various insurers and might be able to offer you a special deal.
Your best option will be to find a broker which is a member of the Association of Medical Insurers and Intermediaries (AMII) which is a trade association for independent medical insurance advisers. Via the AMII, you can Ask an Expert and Find an Expert to ask a local expert a question and get a free reply. This could be anything thing from a claims issue, to a question about cover, a particular insurer, regarding pre-existing conditions and more.
If you've had a positive experience with a broker please let us know.
Big insurers Saga* are not on comparison sites, and may not be mentioned by brokers as they usually only offer their products directly, though you will find them with specialist provider Assured Futures*. So benchmark your cheapest quote from a comparison site, and a specialist broker if you've spoken to one, against the premiums offered by the insurers not listed.
Once you've checked the comparison sites, brokers, and insurers missed you should have a shortlist of your best quotes. Whatever policy you choose, first make sure you know all the key features before you buy then check you're getting the best price.
We got quotes from the big players in the market to see which comes out on top. To make it fair, all quotes have a zero excess (so you pay nothing towards a claim), unlimited outpatient care (this depends 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 perks.
For a healthy, non-smoking 35-year-old
|Provider||£ per year|
Correct as of March 2017
If your health insurance company rejects your claim and you think it has done so wrongly, do not take it lying down. First complain to it directly then if you don't get a response within eight weeks, complain to the free Financial Ombudsman.
The ombudsman is an independent adjudicator that will make the final decision on a claim if you are locked in a dispute with your insurer. For more on how to make a complaint, read our Financial Rights guide.
Free tool if you’re having a problem
This tool helps you draft your complaint and manage it too. It’s totally free, and offered by a firm called Resolver which we like so much we work with to help people get complaints justice.
If the complaint isn't resolved, Resolver will automatically escalate it to the free Financial Ombudsman Service.