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Private medical insurance begins to shed its exclusive tag

Private medical insurance is the third most valued company perk, after a pension and a car. But the number of people buying it for themselves is steadily growing.

Almost seven million people, about 12 per cent of the population, are now covered, with a third of the cover provided by employers. This is set to expand to 16 per cent of the population by the end of the century, according to City analysts Laing & Buisson.

However the cost of PMI is also rising, by more than the rate of inflation. Last year the average price went up by nearly 6 per cent, which was mostly due to increased claims rather than hospital or specialists' fees.

The exclusive image of private health care is slowly being undermined, with younger people less likely to put up with playing political roulette with their health. With more people worried about the downgrading of the NHS, insurers have introduced a wide variety of options. Budget cover, particularly, is becoming more popular. The plans on offer range from budget policies which only pay out if the NHS waiting list is longer than six weeks through standard plans to top-of-the-range schemes.

The latter give a full refund for most treatments, including accommodation, complex surgery, psychiatric and pregnancy cover. Many insurers also offer three or four different bands of cover, usually ranked A to D. The A bed is equivalent to a four or five star hotel, where D is often a pay bed in an NHS hospital. Other insurers base their premiums on your postcode. So anyone living in central London or Edinburgh is likely to pay a higher rate, whereas people who live closer to the smaller regional hospitals would be charged at lower rates. All the insurers are keen to stress that the difference in rates in no way affects the quality of treatment on offer.

One disadvantage of PMI is that it usually excludes existing medical conditions. Pregnancy and dental care are also areas where it is important to study the small print. Generally pregnancy is covered only by the most expensive plans and dental treatment only if an overnight stay in hospital is required.

Another factor which affects the cost of cover is whether or not out- patient cover is included. Without this the cost is reduced dramatically. But remember that PMI is only for the treatment of acute conditions, or in other words, short-term illnesses. Chronic conditions and long-term or recurring illnesses are excluded. These are covered by critical illness and permanent health insurance policies instead.

Abbey Life: 01202 292373

BUPA: 0171-353 5212

CIGNA: 0171-626 8744

Exeter Friendly Society: 01392 75361

Guardian Health: 01303 850303

Norwich Union: 01703 266533

PPP: 01892 512345

Prime Health: 01483 440550

Sun Alliance: 01403 232323

Western Provident Association: 01823 623000

Standard private medical insurance plans: annual premiums

Company Plan name Single male, Couple, male aged Family, male aged 40

aged 30 50, female aged 47 aged 37, 2 children

pounds pounds pounds

Abbey Life Health Care 374.28 964.08 957.24

Budget Healthcare 173.64 527.16 575.64

Bupa Bupa Care 453.75 1195.44 1230.12

CIGNA Personal Healthcare 757.48 1686.92 1995.06

Exeter Friendly 50 Plus Preferred 507.09 1203.84 1313.80

Society Low Cost 333.12 882.21 928.14

Guardian Health AEGIS 369.99 1055.70 1050.60

AEGIS Value 277.53 791.86 788.04

Norwich Union Express Care 460.88 1342.43 1386.46

Trust Care 307.13 829.27 914.27

Personal Care 173.40 471.60 554.40

PPP Classic 441.67 1075.02 1026.13

Value 144.94 361.00 338.38

Prime Health Primecare 262.70 707.85 743.20

Sun Alliance Health First 180.00 492.00 540.00

Western Provident Cedar 399.59 1098.72 1017.36