Private medical insurance – is it worth it?

How does it work?

The UK is one of the few places in the world where there is a free health service for all, so why might you choose to pay for private medical care? In surveys, the main reasons given were the fear of superbugs and lack of cleanliness in NHS hospitals and a desire to avoid long waiting lists for operations.

Private medical insurance (PMI) allows you to bypass NHS waiting lists and receive accelerated consultations and treatment for a variety of short-term medical problems. PMI does not cover every medical condition, though, so it is important to check the exclusions and make sure you get the policy that is right for you.

PMI is not essential – there are more important types of protection insurance to buy first, such as life assurance and income protection insurance – but if you have these policies already and some disposable income then PMI does bring peace of mind.

What does it cover?

Basic PMI plans cover essential treatments, including surgery, consultations, nursing and hospital care, but do not cover treatment for drug addiction and incurable conditions. Comprehensive PMI policies offer additional benefits, including complementary medicine. There are two types of plan: – fully underwritten. These require you to tell the insurer your full medical history so that it can decide what will and won’t be covered. – moratorium. These impose blanket exclusions on pre-existing conditions going back a set number of years. Moratoriums are usually cheaper, but you should be aware that any disorder that subsequently occurs will not be covered if a medical examination shows it first began during the moratorium period.

What are its limitations?

• PMI does not replace all NHS services. Accident and emergency treatments are not covered, for example.
• If you develop a very serious illness, such as cancer or a major heart condition, you will not necessarily receive quicker treatment privately than you would from the NHS.
• You will not be able to choose exactly where you are treated or by whom. You will typically choose from a selection of hospitals and health centres defined by the insurer. The wider the selection, the higher your premium.
• You are not guaranteed treatment in a private hospital. You may be treated in a private patient unit within an NHS hospital.

How much does it cost?

Premiums vary, depending on the level of cover, your age, state of health and whether you smoke.

Premiums will tend to go up annually to keep pace with medical costs and because you are more likely to become ill the older you are. Discounts are sometimes available if you pay the annual premium in advance or if you agree to pay an excess on any claims, just like any insurance.

Many policies also include a no-claims bonus, which rewards you financially for remaining in good health.

Check whether you have employer-provided PMI first

Many employers provide PMI as an employee benefit, so check whether yours does before looking into taking out PMI on your own behalf. You still need to pay tax on the value of this employee benefit, but for basic rate taxpayers this equates to just 20% of the actual cost.

Next steps

If you feel that private medical insurance is something that you and your family need, you should make sure that the policy you take out is the right one for you. The choices are quite complex – determined by the level of cover you need and the amount you can afford to pay. If you would like to find out more about this type of protection insurance or would like to get a competitive quote then please contact Hamish Gairns or Richard Smith at Marchwood IFA. If you already have PMI and would like a review of your cover and its cost then please do contact us as we can research the market place for you and make sure that you still have the right policy for your needs.