IF YOU did not want to wait a year for a NHS hip replacement operation, could you face a private hospital bill of up to pounds 5,265? That is the typical cost for this sort of operation, according to Bupa. It is the main reason why people seek private health insurance - itself a costly decision, as the table shows.

The figures given are sample monthly premiums from five of the leading health insurers for a family of four, with both parents aged between 35 and 40. The higher figure in each case is based on the company's top-flight policy, with a mid-band premium. The figures can be no more than guidelines since policies vary so much from one to another. The lower figure shows typical monthly premiums for the same family under a low-cost scheme which will have any of a number of restrictions and exclusions.

A fully comprehensive scheme will cover you for all hospital charges and specialists' fees for in-patient or 'day case' treatment (where you are in and out of hospital within a day), other treatment charges such as blood tests, physiotherapy, radiology, chemotherapy or radiotherapy, as an in-patient or as an out-patient, and out-patient consultations with a specialist. There may be a whole range of other benefits: cover if you go abroad; nursing at home; a private ambulance; the cost of accommodation for a parent staying with a child in hospital; and some cover for dental treatment and sight tests. There is a list of exclusions which is fairly standard to the whole industry - see the main story opposite.

The amount and scope of cover is the main area affecting charges. Health insurance plans usually have a range of options which reduce cost. The commonest is 'banding', where private hospitals are divided into different categories, and the policyholder can choose a cheaper or dearer list. Insurers emphasise that banding is to do with the 'hotel' side of hospital care - whether or not you have a private room with adjoining bathroom and the quality of the decor and non-medical service. Yet a small hospital in a lower band may not have the equipment to deal with a sudden complication, and you could find yourself transferred to another hospital in the middle of your treatment.

If, for whatever reason, you opt to be treated in a hospital which is not in your band of cover, you will be liable for the excess. Insurers state a level of 'out of scale' benefits to cover this situation. Norwich Union ignores hospital banding and takes the postal district of the policyholder to calculate the premium. The figures given in our table were designed for a family living in Oxford. In central London the comparable Express Care premium would be pounds 150.32 a month.

You may be able to reduce your premium by accepting various exclusions or agreeing to pay, say, a pounds 100 excess on each claim. Most companies offer discounts to various groups of people to whom the plans are promoted. The BCWA premium shown would be reduced to pounds 68.51 for civil servants and local government officers. Frequency of payment may also make a difference, with a lower price for annual payment by direct debit.

Most insurers offer a budget plan, which is much cheaper than the comprehensive version. These plans give limited cover compared to the fully comprehensive version. A common restriction is the 'six-week option', where the patient is covered for private treatment in hospital if the wait for an NHS bed is longer than six weeks. As a further inducement to keep claims down, some insurers offer a pounds 50 daily cash payment if you have NHS hospital treatment.

Budget plans may also exclude out-patient treatment which is not related to a hospital stay - in other words, treatment at a foot clinic would be excluded, but physiotherapy after an operation would not. Putting restrictions on the amount which will be paid for each category of treatment is another feature of budget plans. PPP's ValuePlan has a maximum benefit of pounds 10,000 a year. Other insurers have a list of treatments with the maximum figure they are prepared to pay for each. If you accept treatment costing more than the listed maximum, you could land up with a bill.

Unlike car insurance, your health premiums are not affected by claims, though there is almost always an annual increase due, say the insurers, to rising costs. Increases at PPP this year ranged from 3 per cent to 20 per cent across all policies, with an average rise of 12-13 per cent, though the company expects no increase and possibly even some reductions for personal customers this year. Medical inflation has always outdone the RPI, though, so in general policyholders should be prepared for a growing cost. WPA offers a no-claims bonus: after five years without claims, you get the sixth year free.

Insurers like to catch you young, before you have developed any health problems, and hang on to you for life. If you already have an illness you may still be accepted , but the existing condition and complications arising from it would not be covered.

With all the different policies, bands, options, hospital lists and schedules of treatment it is very hard to work out which plan offers the best value for your situation. It is worth going through the list of benefits with a competent adviser or someone from the company concerned, to work out exactly what each one means.

In some instances your health insurance may cover more than you think: most insurers, for instance, will cover alternative medical procedures such as osteopathy, chiropractic and acupuncture. Though pregnancy and childbirth are a standard exclusion they may also cover complications during pregnancy which result in surgery.

If your main aim is to avoid a long wait for NHS treatment you may find that a budget plan is adequate. If you want an executive room with adjoining bathroom, colour television and fax, be prepared for the high premiums of a comprehensive plan.

(Photograph and table omitted)