Private medical insurance: Is it a wealth risk?

Tailoring your cover to meet your needs can significantly cut premiums

Private healthcare caught the unwanted attention of the Office of Fair Trading (OFT) last week with the watchdog referring the industry to the Competition Commission. Concerns have been raised that nationally there aren't enough providers and insurers to ensure healthy competition in the market and that costs aren't always transparent for private patients.

The news could mark a potential victory for consumers. "More often than not the public is not exposed to the actual cost of treatment and that's not a very healthy situation for any consumer," says Neville Koopowitz, the chief executive of the insurer PruHealth.

"Most private medical insurance [PMI] policies have got limits on the various types of procedures and if prices were more transparent consumers could manage their product more effectively so they are not exposed to shortfalls".

The main benefit to holding PMI is that you can jump the NHS queues, but with the best policies you can take your pick of the best hospitals and doctors, and receive treatment at a time and place that suits you. You may even gain access to drugs and treatments not available on the NHS, but PMI is only designed to cover the cost of short-term, curable illnesses or injuries known as "acute conditions". It won't cover pre-existing, long-term illnesses such as diabetes and asthma, but otherwise will pay out for in-patient tests, surgery, hospital accommodation and nursing. You can also include dental, optical and even alternative therapies at an extra cost.

If you go private without insurance you can expect to pay through the nose – a private MRI scan can cost up to £1,000 and a hip replacement up to £10,000 – but if you want comprehensive cover, premiums can also be steep.

We asked the comparison site Activequote.com to look at the best buys available for a 34-year-old male, non-smoker, living in Birmingham. These ranged from £10 a month for a basic policy from WPA up to £50-plus a month for a policy with no limits on outpatient cover from PruHealth.

The main factors that affect premiums are medical inflation (in particular advances in technology for heart and cancer treatment) and age, simply because as we get older we rely more on healthcare.

One problem for insurers is that when times are tough and people are looking to curb their spending, it is often seen as luxury. Mr Koopowitz says: "The problem is that it's the young and healthy who leave first and insurers are left with the older population who are claiming more and using those high-tech treatments more. Put that in the mix, and if more and more people pull out, you're only left with the really ill who won't be able to afford their premiums."

There are still ways you can save money, including making the most of any discount schemes on offer including optional excesses, no-claims discounts and voluntary six-week waits (meaning you only go private if the NHS cannot provide treatment within six weeks) which can reduce premiums dramatically without reducing your cover to a significant degree.

PruHealth offers its Vitality scheme, giving you reward points which can save you money on travel, your mobile phone bill and gym membership, and eventually to cut premiums on the proviso that you have regular health screens, eat healthily and keep fit.

You can find quotes on the usual comparison websites such as Moneysupermarket.com and Comparethemarket.com, or go through specialist brokers such as PMI Partners and ActiveQuote.com.

The devil, as always, is in the detail so check the limits that apply to each type of benefit when you're comparing policies. For example, there may be a limit on the amount the insurer will pay for a single condition or how long it will continue to cover it.

Cancer cover is one feature that will vary considerably from one insurer to another, with some offering full cancer cover and others limiting the length of time for which you can claim. You may be able to tailor the policy so that you are only covered for surgery or advanced cancer drugs.

Mark Didehvar, a 35-year-old, self- employed IT consultant, is typical of those who have taken up PMI.

"I think the NHS is great if you have a medical emergency, but sorting out less serious issues through the NHS can take a long time as you are subject to lengthy waiting periods for tests and results," Mr Didehvar says. "Being self-employed, I need to fix any medical issues as quick as possible in order to minimise time off work and get back to full health as quickly as possible."

Although he pays a fairly hefty £117 a month with Pruhealth, this includes cover for his wife and three sons, full cancer cover and no excess to pay.

Most PMI policies are modular, meaning you can start with the most comprehensive policy and then deselect elements of cover to cut the premium according to your budget.

Get to grips with how good the NHS is in your area and then base your priorities on this. So, if you have short NHS waiting lists you could save money on this, and if your main concern is in-patient cover – for lengthy stays in hospital – make sure you have comprehensive cover for this. You can also restrict your hospital choices to ensure that you don't pay for hospitals you will never use.

Never take shortcuts with your medical history, though, and always declare pre-existing conditions.

Shared responsibility or co-payment policies are another way to slash your premiums. With these you share the cost of treatment with the insurer: typically you pay 25 per cent and the insurer 75 per cent, subject to an agreed annual limit. Once the limit is reached the insurer will cover further costs.

Another option is a healthcare cash plan. With these you pay a monthly premium and can claim cash back on NHS or private treatment, up to an annual maximum limit.

Start your day with The Independent, sign up for daily news emails
Suggested Topics
Have you tried new the Independent Digital Edition apps?
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Sales Executive / Foreign Exchange Dealer - OTE £40,000+

    £16000 - £40000 per annum: Recruitment Genius: A Foreign Exchange Dealer is re...

    SThree: Experienced Recruitment Consultant

    £20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

    Recruitment Genius: Collections Agent

    £14000 - £16000 per annum: Recruitment Genius: This company was established in...

    Day In a Page

    Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

    Cameron lowered the flag for the dead king of Saudi Arabia...

    But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
    Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

    Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

    Humanity must be at the heart of politics, says Jeremy Corbyn
    Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

    Joe Biden's 'tease tour'

    Could the US Vice-President be testing the water for a presidential run?
    Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

    Britain's 24-hour culture

    With the 'leisured society' a distant dream we're working longer and less regular hours than ever
    Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

    The addictive nature of Diplomacy

    Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
    Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

    Fashion: Ooh, Lady Chatterley!

    Take inspiration from DH Lawrence's racy tome with equally racy underwear
    8 best children's clocks

    Tick-tock: 8 best children's clocks

    Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
    Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

    Charlie Austin: ‘If the move is not right, I’m not going’

    After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
    Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

    How Isis profits from destruction of antiquities

    Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
    Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

    'If we lose touch we’ll end up with two decades of the Tories'

    In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
    Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

    The Arab Spring reversed

    Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
    King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

    Academic claims King Arthur was real - and reveals where he lived

    Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
    Who is Oliver Bonas and how has he captured middle-class hearts?

    Who is Oliver Bonas?

    It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
    Earth has 'lost more than half its trees' since humans first started cutting them down

    Axe-wielding Man fells half the world’s trees – leaving us just 422 each

    However, the number of trees may be eight times higher than previously thought
    60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

    60 years of Scalextric

    Model cars are now stuffed with as much tech as real ones