Health insurance - what it's all about

The NHS offers free access to healthcare in the UK but you can choose to go private, using private medical insurance (PMI) to help pay for your treatment and consultations.

The benefits could be shorter waiting times to see a consultant and have surgery, a private room in hospital and more choice over where you’re treated. As with most insurance policies, you’ll pay an excess on any medical insurance claim and the larger it is the lower the premium is likely to be.

You can also take out medical insurance as an individual or with others, such as your partner or family.  When choosing private medical insurance, consider the following options:

• Full medical underwriting - you answer questions about your health. The answers help determine the conditions of your cover
  
• Cover on a moratorium basis – not so many questions but any conditions you’ve had in recent years are likely to be excluded from cover initially

What you need to know and check:

• The older you get, the higher the premium is likely to be
  
• You can't take out private medical insurance for treatment you know you're going to need
  
• Pre-existing conditions may be excluded from cover, at least initially. Don’t hide these from potential insurers because you could invalidate the policy if they find out 
  
• It may not cover chronic, long-term conditions, pregnancy, fertility treatment etc
  
• It’s unlikely to cover costs associated with alcoholism or drug abuse
  
• Some policies may, for example, limit the out-patient treatment available
  
• You could choose cover that only kicks in if NHS services are not available within a certain timeframe
  
• Ask whether no claims benefits are included

Don’t confuse health cash plans with private medical insurance. Cash plans offer help with everyday healthcare costs and can be fairly specific, eg related to dental care. Some of the more popular include:

• Hospital cash plans. You receive a certain sum each day you’re an in-patient at hospital although payments are likely to be limited to a total number/amount. The cash can help with expenses resulting from a hospital stay. There will be exclusions including age restrictions, out-patient treatment, pre-existing conditions, pregnancy and so on.
  
• Dental insurance. This will help pay for treatment such as fillings, root canals, dentures and so on up to a certain sum, either private, NHS or both. Some policies may not cover conditions like mouth cancer and more serious surgery as well as treatment you knew you needed before signing up so check the policy carefully. Other policies offer such cover but only after a period of time.
  
• Personal accident plans. These offer cash payments if you have a serious accident or injury and can be extended to cover other family members. As with any such plans, check the exclusions carefully, for example is cover valid if you’re injured motorcycling or skiing?  Also see what other benefits may be available, eg counselling and helplines. Most plans won’t pay out if the accident is caused by such things as drink-driving or drug abuse.
  
• Accidental death plans. This will pay a cash sum to your dependants if you die as a result of an accident. You can usually choose the level of cover, which in turn helps determine the premium you pay. You could also extend the policy to cover your partner and family. Some policies offer support and bereavement services. But remember to check the details because cover may stop at a certain age or be refused if you die as a result of drink or drug abuse etc. Benefits may be reduced in some cases, eg where the accident occurs when you’re riding a bike.

Critical illness cover is designed to pay out if you’re diagnosed with a named illness, such as cancers or a stroke. It usually pays a lump sum rather than an income.

Again, it’s vital that you check the conditions and exclusions to ensure the policy meets your needs as not all critical illnesses will be covered. An insurer will also expect certain criteria and levels of severity to be met before paying out. Some people take out such a policy to help them pay off a mortgage or other large debt if they’re diagnosed with a life-threatening illness. As such it’s worth discussing with a financial adviser.

Always be honest about your lifestyle and family medical history with a potential insurer as hiding things from them when applying could invalidate your policy in the long run.