Private Medical Insurance

There is a wide choice of individual medical insurance. Over the past decade more Insurers have come into the market. These have brought new thinking and the choice of cover offered has expanded greatly.

The first decision you must make is the level of cover you want. A major factor will obviously be cost and the listing that follows starts from the minimum cost. It is almost impossible to put actual figures as these vary widely but we have tried to indicate the relationship.

• Basic:

  Should pay all costs while you are admitted to hospital. There may be a small amount of help with other costs such as seeing Specialists but this is often conditional on it leading to, or following, your being admitted to Hospital and the policy meeting the cost.

• Basic plus:

  Should pay all costs while admitted to hospital. There will be varying amounts of help with out-patient costs such as consultations, diagnostic tests and physiotherapy.

• Standard:

  A good standard policy will effectively take over from the NHS once your GP refers you to a Specialist for an acute condition covered by your policy. It should include Specialists, diagnostics, hospital admission, follow up costs and probably complementary therapies. Normally out-patient consultation and diagnostic costs are met in full.

• Deluxe:

  Includes all that a standard policy covers plus varying lists of extras. These can include dentistry, private maternity costs, private GP costs, spectacles, private prescription costs, annual travel insurance and other add ons.

As with so many things your pocket may not stretch to cover your ideal level of cover. Be realistic about what you can afford. As a rule of thumb, taking the cost of Basic cover as 100%, Basic Plus would be about 150%, Standard about 200% and Deluxe anything from 250% upwards. The figures are illustrative.

Premiums vary greatly and the most expensive may not give the best individual medical insurance cover. The cheapest now may not be in 5 or 10 years' time. Premiums normally go up for two reasons - age, where it rises because you are getting older, and "medical" inflation, mostly the result of new treatments becoming available and increasing numbers of claims. Historically "medical" inflation has been well above normal inflation and it would be wise to assume that it will continue to be at least double the normal level. Rises due to inflation are normally applied yearly.

Other factors that affect cost are:

• Hospital bands:

  The "Hotel" costs are probably the largest part of any hospital stay. Most Insurers use bands from A (the highest cost) to C or D. Some hospitals may be shown as more than one band to reflect differences in rooms. Choose the lowest band that allows the use of hospitals you are most likely to use. Band C will be the normal choice outside Central London. Band D is usually only available in rural areas and may restrict your choice. A few Insurers allow you to use any hospital on their list, although there may be a surcharge for use of some Central London Hospitals.

  Reminder - Bands reflect only the accommodation cost. The actual medical treatment will not be affected.

• Postcodes:

  Some Insurers use postcodes to reflect the differences in treatment costs. Living in a city will attract higher premiums, with London the most expensive.

• Voluntary excesses:

  You can choose to pay the first agreed amount of claims, for instance £100. This is normally per person per policy year but may be on each claim. If treatment extends over the policy renewal date the excess will apply for each year and so will normally be applied twice. The excess may occasionally be on the policy as a whole which means that all the excess must be paid before any benefit will be available. Some Insurers deduct the whole cost of the claim from your benefits even if you have paid part of it through the excess.

  Reminder - Unlike life assurance you can expect to claim more than once on individual medical insurance. Check how many years you must go without claiming to make the saving on premium worthwhile.

• High Excess policies:

  Some people prefer to make a bigger contribution to their medical costs and so accept a higher level of excess than normally offered. Policies that offer excesses of between £1000 and £5000 per person are available and the premiums are much less. However you must remember that the higher the excess the less often you will be able to claim. A few years of being unable to claim for treatment may make you reconsider.

  Reminder - Be absolutely sure that this is the type of policy you want. Don't just be seduced by low premiums.

• Co-insurance:

  This is sometimes known as shared responsibility. It is not an excess. You agree to meet a percentage of claims costs and the Insurer meets the rest. The advantage is that you do not have to meet an excess amount before benefits start - the policy helps immediately. The downside can be that your liability continues until you have reached your agreed maximum.

• Separate policies:

  If there is a wide difference in ages it may be cheaper to take separate policies.

• Age freezing:

  Means no, or limited, age based premium increases. Premiums usually increase yearly or in five or ten year bands for age, so if an Insurer imposes no, or only one, such increase this should keep future costs down.

• "Six week" options:

  These are policies that meet hospital admission costs only if the NHS can't offer free treatment within six weeks of diagnosis. This should reduce the cost.

  Reminder - The six weeks starts from Specialist diagnosis and not from your GP referral. The six weeks usually applies to admission delays within your local NHS area. This rules out short notice admission as a private patient.

• No claims discount:

  Some policies offer a "starter" discount from the full premium that increases for every full policy year that there is no claim on the policy. Every claim will lose at least two levels of discount, so it will take a minimum of 2 years without claiming to regain the lost discount. Wording varies between Insurers. The upside is that low claimers will be rewarded by higher discounts.

  Reminder - The more people covered by your policy the greater the possibility of claiming and it is normally each claim that loses you discount. It may be worth taking separate polices if two or more people on the policy.

• NHS Private policies:

  Most policies allow you to use both private hospitals and NHS hospitals as a private patient. There are also policies that restrict you to using only specified NHS hospitals as a private patient. These are worth considering if they are cheaper than other policies giving wider hospital choice, although they do give access to many of the major Teaching Hospitals. Some private hospitals may be available where they provide the private facilities for nearby NHS hospitals.

• Paying for treatment yourself (Self Pay):

  People have paid for cosmetic surgery and other treatment not met by individual medical insurance for many years. It is certainly an option for those who have no cover for a one off operation. Hospital groups such as Nuffield offer package, prices, and maybe interest free payments, for many procedures. These normally include Specialists' charges. Think long and hard before taking this option for all your possible medical costs. You will need to replace any money you spend and, if you are unlucky, costs may be high. Think about taking a low cost policy, maybe with a large excess, to cap your liability.

You must remember that you are buying an insurance policy and insurance will only cover something that happens after the policy start date. Assessing the risk is called "underwriting". Insurers use one of two methods:

• Full medical underwriting:

  you answer questions on the application about your medical history and, based on your answers, the Insurer advises you of any specific exclusion(s). The Insurer may also ask your GP for a report.

  Reminder -You must give full and honest answers. Don't assume that something you consider unimportant will be thought so by the Insurer. Put everything down and let the Insurer decide. The biggest cause of rejected claims is non disclosure of information by applicants.

• Moratorium:

  no medical questions are asked but generally any condition suffered in the five years before taking the policy will not be covered until you have had the policy for a minimum of two years and have had two consecutive years without consultation, treatment or advice, and sometimes symptoms, for that condition. This includes GP consultations and prescriptions.

  Reminder - this does not mean that conditions will automatically be covered two years after taking out the policy. You must have two consecutive years without any form of treatment or advice and maybe symptoms. Exact wording varies between Insurers. Make sure that you fully understand your Insurer's version. Do not put off necessary medical advice during the moratorium period.

NB. Remember that every policy has some standard exclusions as well as any that may be imposed on you as a result of specific underwriting.

Very important It is your responsibility to provide complete and accurate information to insurers when you take out your policy, throughout the life of the policy, and when you renew your individual medical insurance. It is important that you ensure that all statements you make on the proposal forms, claim forms and other documents are full and accurate. Please note that if you fail to disclose any material information to your insurers, this could invalidate your insurance cover and could mean that part or all of a claim may not be paid.