Money: The devil is in the details

Private health cover may sound attractive, but read the small print, says Abigail Montrose
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The Independent Online
Despite all the criticisms, most people believe Britain has one of the finest national health services in the world. So why do around 7 million of us have private medical insurance (PMI)?

The main reasons are long NHS waiting lists (an estimated 1.2 million in the queue) and the desire to choose where and when we receive treatment.

More than 30 companies now offer PMI, but one of the biggest problems is trying to compare like with like. Cover varies enormously, so you cannot compare on cost alone.

Many sidestep this by joining a scheme through an employer. PPP, the second largest market player after Bupa, estimates that 60 per cent of policyholders are in a company scheme. Some employers offer a standard PMI contract, often paying all premiums. The employee's partner may be included, and some employees may be able to pay extra to have their children covered. The level of cover will vary, so it is worth checking.

Contracts are sometimes described as "budget" or "standard". Budget policies usually cover most in-patient costs. You may only be able to receive treatment in named hospitals, and with some you may only be able to stay in a private ward in an NHS hospital. Out-patient cover is usually limited, and some only give cover if it leads to in-patient treatment.

A few insurers, notably Norwich Union Healthcare, offer policies which only pay for private treatment if there is at least a six-week NHS wait.

While cover is limited, budget policies are significantly cheaper than standard plans. Premiums are based on factors like level of cover, age, postcode and choice of hospital.

As our table shows, the cheapest premium a 50-year-old can expect to pay is pounds 22 a month, while the lowest a family of two adults aged 35 and two children can expect to pay is pounds 32 a month - more in a major city.

Standard - sometimes called comprehensive - policies cost substantially more because they offer wider cover. You can expect more outpatient cover, which can be an advantage as treatment is increasingly conducted on an out-patient basis.

"Other benefits can include post-hospital care," says George Connelly, of independent intermediary firm Health Care Matters. "After you leave hospital, you often have to go back to visit a specialist, and this may involve physiotherapy. Generally this is not covered by budget policies."

Not only does the range of cover vary between standard PMI contracts, but so do the levels of cover. Some policies allow alternative medical treatments, others do not. All of this will affect premiums.

To keep costs down, you can often opt for treatment only in lower price- band hospitals. Another option may be to pay an excess, so you pay the first few hundred pounds of any medical bill. No-claims bonuses may also be available.

As our table shows, standard PMI contracts for a 50-year-old can start from pounds 36 a month, while premiums for a family of two adults aged 35 and two children range from pounds 66 to pounds 145 a month, depending on the kind of policy.

There are a handful of "super de luxe" PMI policies on the market which include dental charges, glasses and eye tests. They are offered by Clinicare, PPP and Bupa, but they are very expensive.

If you are concerned about dental costs, you could consider taking out separate dental insurance. Check first with your dentist, who may already have a special scheme in place.

Companies offering dental payment schemes include Denplan (0800-401402); Bupa (0800 230230); Complete Direct Care (0181-848 1028); Clinident (01438 747733); Densure (01255 221001); and Highland Dental Plan (01463 222999).

There is also a range of cash plans which will cover a percentage of dental and other medical bills, although if you need emergency or major treatment the cover may not be adequate.

Plans are available from BHSF (0800 622552); Hospital Savings Association (01264 353211); and British Healthcare Association (0113 232 0903).

Monthly premiums for medical insurance

Individual Aged 50 Family (two children)

Standard Low cost Standard Low cost

BUPA pounds 60 pounds 30 pounds 102 pounds 59

PPP pounds 71 pounds 23 pounds 145 pounds 45

Norwich Union pounds 62 pounds 26 pounds 114 pounds 47

Prime Health pounds 49 pounds 30 pounds 73 pounds 44

WPA pounds 52 pounds 22 pounds 92 pounds 42

BCWA pounds 61 pounds 32 pounds 110 pounds 58

Cornhill pounds 36 pounds 28 pounds 66 pounds 47

OHRA pounds 47 pounds 24 pounds 76 pounds 32

Exeter pounds 44 pounds 33 pounds 92 pounds 65

Source: Health Care Matters (01300 320222)