This chapter is all about private health insurance and has information about:
- Why people pay for private health insurance
- What private health insurance covers and doesn’t cover
- How private health insurance works
- Different types of medical insurance
- If you need private health insurance
- Where to find private health insurance
- How insurance premiums are calculated and ways to reduce them
- Taking out a policy and making a claim
- Alternatives to private health insurance – healthcare cash plans and critical illness insurance
- Whether you need dental insurance
- Dental insurance policies
- Alternatives to dental insurance – capitation plans
Why do some people in the UK get private health insurance?
With a National Health Service that is free for residents of the UK and with care ‘from the cradle to the grave’, why do some people get private health insurance? In this chapter we analyse the reasons why people opt for private health insurance before looking at the issue in detail with information about different policies as well as useful tips on finding and choosing the right insurance and how to reduce your premiums. If you can’t afford the premiums or it isn’t what you’re looking for, what are the alternatives?
In the second part of the chapter, we consider dental insurance and whether you really need it. We consider what dental insurance policies are like and compare insurance cover to capitation plans to see which is the best value for money.
Why pay for private health insurance?
One of the reasons why people choose to pay for private healthcare is that they wish to bypass lengthy NHS waiting times for an appointment and/or treatment. Another advantage of paying for healthcare is that, in theory, you can opt for the hospital and surgeon of your choice. If your health condition requires you to stay overnight – or even a longer stay – then with many insurance providers you’re entitled to a private room instead of being on a mixed ward.
Many insurance policies also allow you to have access to exclusive drugs. This is medication which isn’t available on the NHS but has been approved by the National Institute for Health & Care Excellence (in England and Wales) or the Scottish Medicines Consortium. Finally, some private healthcare schemes allow you to have physiotherapy, which might not be available on the NHS or which requires a long wait.
What does private health insurance cover?
Private health insurance doesn’t cover you for everything and the components of a standard policy differ widely from provider to provider. Therefore, if you decide that this insurance is for you, then you really need to understand the product that you’re buying and what is covered and what isn’t.
This insurance is generally for essential medical conditions (also known as acute conditions) which respond quickly to treatment as well as surgery and which might, or might not, need medical tests.
Some healthcare insurance pays only for hospital cover whilst others might also pay for outpatient treatment. The policy might cover you for the outpatient consultation and diagnosis but the amount of financial aid you receive might be capped so you don’t receive the full amount. Apart from exclusive drugs, you’re often covered for hospital accommodation and nursing care too.
The policy may also offer complementary medicines (although the definition of what they are varies from provider to provider), a private ambulance, home nursing, a 24-hour helpline and parental accommodation (if your child is in hospital). The provision of psychiatric treatment also varies widely since this straddles the line between curable illnesses (which are covered) and long-time care (which isn’t).
What doesn’t private healthcare insurance cover?
Private healthcare insurance doesn’t cover you for longer-term treatment such as kidney dialysis nor does it help with chronic conditions such as asthma. Injuries and health complaints as a result of drug abuse or extreme sports aren’t covered in a policy either. Finally, organ transplants, normal pregnancies, fertility treatments and non-essential cosmetic surgery won’t be paid for by your insurance provider.
How does private health insurance work?
Once you’ve agreed on the level of healthcare cover you require, you pay monthly premiums to your insurance provider and in return, they will pay out up to a specified limit for the consultation, tests, and/or treatment/surgery including the hospital bed.
Whether you have to supply a full medical history depends on the type of private health insurance you choose.
Some people choose private health insurance because they wish to avoid NHS waiting lists, want to choose their own surgeon/hospital or because they’d like their own private hospital room.
Some people take out private health insurance because they have access to exclusive drugs and can have physiotherapy.
There’s great variety in what is covered or isn’t under private health insurance so you should understand the product thoroughly before taking out a policy.
In return for monthly premiums, your healthcare is paid by your insurance provider up to an agreed limit.
Different types of private health insurance
Although you can take out private health insurance as an individual, you can also find joint, family and children’s policies.
Many insurance providers give you standard in-patient cover and then you add the cover for things you consider to be essential.
There are 2 main kinds of private health insurance: fully underwritten and moratorium. For fully underwritten insurance, you need to supply a full medical history. This type of policy is more expensive but it’s also more comprehensive. For moratorium private health insurance, you give limited information to your insurance provider and there’s a blanket exclusion on pre-existing medical conditions. In return, the premiums are much lower though the coverage will be more limited.
Increasingly, many insurance providers give you standard in-patient cover and then you add the cover for things you consider to be essential. In this way, you end up with insurance cover which is tailor-made for your needs.
Do you need private health insurance?
Before you decide to purchase private health insurance, there are a number of factors to think about.
First of all, you should consider whether you believe that the state of the National Health Service is so bad that private healthcare is the best option for you.
Next, you should check with your employer since many offer private medical cover as part of their employees’ workplace benefits package. If you don’t have a record of any such cover, you should check your contract or with the Human Resources department of your company. It would be a pity to spend so much money on premiums when you’re already protected.
Where to find private health insurance
Like many other kinds of insurance, the best place to start your search for medical insurance is from an online price comparison site. However, bear in mind that it isn’t just a question of simply choosing the cheapest policy but to find one which suits you. It’s also incredibly difficult to compare ‘like with like’ since no two policies are exactly the same. Once you have a benchmark quote, you could contact a broker to see if they can beat the quote you’ve been given.
Whatever your situation (but especially if you have a pre-existing medical condition), it’s worth visiting the website of the AMII (Association of Medical Insurers and Intermediaries) for specialised advice.
How many residents of the UK have private health insurance?
According to the ABI, 5.1 million people in the UK have private health insurance and their members pay out £7.4 million every day in claims.
How long is the waiting list on the NHS?
For non-urgent consultant-led treatment, the waiting list on the NHS is a maximum of 18 weeks but this varies from hospital to hospital and depending on the medical field. To find out what the waiting list is in your locality, go to their website and choose the drop-down ‘Services near you’ and then select ‘surgical procedure’. Once you enter a treatment and a postcode in the search field, it will tell you how long the waiting list is exactly.
How much are the premiums for private healthcare?
It’s difficult to say as there are so many variables but Datamonitor give an average figure of £1,120 a year for medical insurance premiums.
Can I never get cover for a pre-existing condition with moratorium health insurance?
This depends on your insurance provider but normally, you can’t be covered for a condition you’ve had in the previous 5 years (whether you had treatment or not; you could have just had symptoms). Then they might exclude the condition for a further 2 years after taking out the policy.
How private health insurance premiums are calculated
There are 2 factors that insurance providers take into account when setting your premiums for medical insurance: your personal circumstances and the level of cover you opt for.
Your personal circumstances are personal details like your age, family, where you live and your lifestyle choices such as whether you smoke, how much you drink and if you do any kind of regular exercise.
There are 2 factors that insurance providers take into account: your personal circumstances and the level of cover you opt for.
Your choice of hospital would also have an effect on your premiums. Most people usually opt for the nearest hospital but did you know that insurers put hospitals into cheap/medium/expensive categories according to how much they charge for the use of their equipment, facilities and for accommodation? Insurance providers try to negotiate with hospitals to get preferential rates and this is passed onto their policyholders but you should be aware of the fact that city hospitals tend to be more expensive than those in smaller towns.
There are 2 kinds of private health insurance: fully underwritten and moratorium.
Before deciding if you need private health insurance, think about whether the NHS suits you and check if you’re already covered as part of an employee’s benefits package.
You could use a price comparison site to get an idea of the prices of premiums and/or contact an insurance broker.
Premiums for medical insurance are set according to your personal circumstances and the level of cover you’d like.
Reducing your premiums for private health insurance
Your age is one of the main factors that insurers look at when calculating your premiums. Although you can’t do anything about your age, you can prove that you lead a healthy lifestyle (no smoking, regular exercise, etc.), which can entitle you to discounts of up to 15% for some insurance providers. Some also have a no-claims discount so you receive a discount of up to 65% in successive years if you don’t make a claim in one calendar year. Some insurers will also give discounts of 5%-10% if you pay the money upfront as a lump sum instead of paying every month.
The amount of cover you would like has an effect on your premiums. You could decide to opt for the ‘six-week option’ and this would make your premiums much cheaper. With this policy, you’d only use your private health insurance if you have to wait longer than 6 weeks for treatment on the NHS. Other cheaper policies tend to have limited numbers of outpatient treatment and lower caps on what will be paid.
The most common way of reducing your premiums, however, is to increase the amount of your voluntary excess (your contribution towards any claim). The higher your excess, the lower your premiums. If you decide to do this, you must be sure that you’ll be able to afford to pay your contribution. The excess should be calculated as a one-off payment per person per year since if it’s by claim, then it’ll be considerably more expensive. Another factor to bear in mind is you would have to pay any claim under the excess in full.
Taking out your policy
When taking out your policy, you should make sure that you supply all the information that your insurer wants of you; not making full disclosure is the most common reason why insurance claims (of any type) are turned down. Not telling the whole truth might save you some money on your premiums but imagine what would happen if your claim was turned down and your policy was cancelled.
Once you have found the most suitable policy, you should read through the terms and conditions carefully to make sure you’re covered for everything you wanted. The FCA stipulate that the policy should be written in plain English; if there’s something you don’t understand, you should contact your insurance provider. Check whether there is a qualifying period before you can make a claim and also whether you have to pay for the treatment and then receive a refund from your insurer.
Making a claim on medical insurance
If you need some kind of medical care, the first thing you should do is to make sure it’s covered by your policy. Then you should contact your insurance provider to get their agreement before starting any treatment. When notifying them of the health condition and its treatment, you should send an estimate of the cost and where the treatment will take place. Don’t start any treatment before you receive official confirmation and remember to keep detailed records of all expenses including receipts.
You can receive discounts on private health insurance if you lead a healthy lifestyle and/or pay annually and in later years, you might be entitled to a no-claims discount.
The level of cover you wish can affect the size of your premiums and you can reduce premiums more if you opt for a higher voluntary excess.
When purchasing medical insurance, answer your insurer’s questions honestly and make sure you understand the terms and conditions of the policy.
Before beginning any medical treatment, you should receive confirmation from your insurance provider and keep detailed records of all expenses.
Alternatives to private health insurance
If after seeing the prices of premiums for private health insurance you decide it isn’t the right choice for you, there are a number of alternatives: a healthcare cash plan, critical illness cover or to self-insure.
A healthcare cash plan allows you to claim a cash sum back every time you visit a medical practitioner (dentist, chiropodist, optician, etc.) for certain basic, and often routine, treatments (rather than unforeseen medical treatments). You pay monthly fees and have a set amount of coverage every year. If you opt for a health plan, you should make a note of when your policy ends since if you don’t use it, then you can’t claim for it later.
The main differences between health plans and private health insurance is that the fees are much cheaper than insurance premiums and there is a flat rate with everyone paying the same fees irrespective of age and without usually needing a medical. Also, you arrange your own treatment and then send in a claim form with receipts and you will be reimbursed around 50% of the costs within 2 or 3 working days when the money is deposited in your bank account.
If you are young and healthy, it might be better to self-insure by putting a regular amount of money into a savings account just in case you need to pay for any medical treatment or dentists.
Another alternative to private health insurance is to take out critical illness insurance. This type of policy covers you for permanent disabilities as a result of an injury or conditions like a stroke or a heart attack. Instead of paying your medical costs, they give you a tax-free lump sum which can be used to pay your expenses (if you can’t work) or allow you to make alterations to your home to make it wheelchair-accessible, for example.
If you are young and healthy, it might be better to self-insure by putting a regular amount of money into a savings account just in case you need to pay for any medical treatment for dentists and so on.
Are there any specialist policies apart from the ‘six-week option’?
There are many specialist policies such as specific ones for over 55s or ones which focus on one disease such as cancer. For such policies, it is better to contact a specialised insurance broker.
How much does age play a role in setting private health insurance premiums?
Premiums will increase with age; it’s estimated that a 70-year-old pays three times as much as a 30-year-old for the same cover.
Why does my insurer want to know where I live?
Your postcode also plays a role in setting your insurance premiums. Insurance providers set the prices according to the experiences they’ve had in the past with claimants sharing your postcode. This is why it’s vital to let your insurer know of any changes in your circumstances such as a change in address.
Why are some drugs not available on the NHS?
NICE (National Institute for Health & Care Excellence) use 3 factors to decide whether a drug should be available on the NHS. Firstly, they look at the evidence for the drug including how it affects both quality and quantity of life for the patient. They also look at its cost-effectiveness and finally they consult health professionals and other interested parties before making the decision to make it available or not.
What is the waiting list for cancer treatment on the NHS?
Although there might be a waiting list of up to 18 weeks for non-urgent consultant-led treatment, for cancer treatment the maximum waiting period on the NHS is 2 weeks.
Did you know that according to the oral health campaign ‘National Smile Month’, 19% of people in the UK delay going to the dentist because they’re put off by the cost? One solution to this might be to take out insurance to cover the price of dental treatment – in the UK only 12% of adults have dental insurance. Before looking at dental insurance in depth, let’s consider whether it’s necessary for everyone.
Do you need dental insurance?
If you are on benefits like Income Support or you are pregnant, then dental insurance isn’t necessary since dental care on the NHS is completely free for you. Children don’t pay in the UK either while in Wales, check-ups and treatment at dentists are free for the over 65s.
Another reason why dental insurance would be unnecessary is if you have a healthcare cash plan – either taken out as an individual or through your employee’s benefits package. All have cover for dental treatment up to a pre-agreed limit and you can receive up to 50% back on any money you pay for treatment.
Another factor to consider is how often you visit the dentist and equally importantly, your overall oral health. There is no guarantee that you won’t need emergency treatment in the future but if you make no claims at all, then it means you might pay years of premiums for nothing. It would work out cheaper to self-insure and put money by for possible future dental treatment.
Apart from relying on the NHS, there are 3 alternatives to private medical insurance: a healthcare cash plan, critical illness insurance and to self-insure.
A healthcare cash plan is cheaper but only covers you for routine medical treatments while critical illness insurance pays a lump sum to help with living expenses after a disability due to an injury or health condition.
Before deciding whether to get dental insurance, you should check if your personal circumstances mean dental treatment is free for you.
If you have a healthcare cash plan or good oral health, dental insurance isn’t worth purchasing.
Dental insurance policies
There are 2 main types of dental insurance policies: for NHS or for private dentists. Whichever policy you decide on, both policies often have a 1-6-month qualifying period when you can’t make a claim. Also, if you haven’t been to a dentist in years, the insurance provider might not pay for problems identified at your first check-up. Unlike many insurance policies, there are often no upper age limits for new customers either.
Prices of policies can vary widely from £50-£250 per year depending on whether you’d like a basic check-up or more extensive treatment plan. Also, there might be an annual limit of how much you can spend on treatment from £500-£1,000. In successive years, some policies give you a no-claims discount whilst others increase your premiums if you claim for anything other than a routine check-up.
If you’ll only visit a NHS dentist, then there’s usually no limits to the number of claims you can make in a year. Treatment is considerably cheaper on the NHS compared to private dentists and this is reflected in the price of the premiums. Another way that pricing differs between NHS and private dentists is that with the NHS, you pay a flat rate even if you need a number of appointments to complete the treatment while private dentists would charge for each appointment separately.
However, if you are going to your NHS dentist only for a check-up (NHS Band 1 priced at £18.80), then NHS dental insurance hardly seems worth it. It’s only when you have more extensive treatment done such as a crown (NHS Band 3: £222.50) that dental insurance really saves you money.
By contrast, dental insurance often has a cap of 50%-70% for treatments at a private dentist so you must make a significant contribution to anything you have done. Again, if your oral health is generally good, then it might make more sense financially to self-insure and not take out a dental insurance policy.
Alternatives to dental insurance – Capitation plans
If you generally have good oral health and don’t have a healthcare cash plan, it might be a better idea to take out a capitation plan. These plans allow you to spread the cost of your dental care over a year.
At your first check-up, the dentist examines your teeth and puts you in a category with a set monthly fee according to how much treatment they believe you will need over the year. You pay the dentist directly so fees can vary and some might request a separate fee to join the scheme as well. However, as you continue regular treatment and follow your dentist’s advice, it’s quite possible for you to change category so your fees decrease.
The main disadvantage with capitation plans is that you’re tied to a particular dentist so if you move house, you have to start again under a different dentist. Also, you aren’t covered for specialists like orthodontists.
In terms of value for money, it probably works out the same as a dental insurance policy if you need only some treatment. If you need extensive work on your teeth, dental insurance would probably work out as cheaper. By contrast, if you have good teeth, then the NHS is probably still the best choice for you.
Dental insurance policies can be for NHS or for private dentists; you should check your policy for limits, a qualifying period and no-claims discounts.
NHS dental policies are cheaper and often have unlimited claims while the amount you receive for treatment by private dentists is capped at 50%-75%.
Capitation plans are an alternative to dental insurance and let you spread the cost of treatment over the year.
You may have reduced fees as your oral health improves but you’re tied to one dentist and don’t have access to dental specialists.
How many people have dental insurance in the UK?
According to ‘National Smile Month’ statistics, only 12% of UK residents have dental insurance.
How much is spent in the UK on dental treatment a year?
In the UK £5.8 billion is spent every year on dental treatment.
Does dental insurance cover the cost of teeth whitening?
No. Dental insurance doesn’t usually cover any cosmetic dental work.
What other cover does dental insurance give the policyholder?
You will be covered for accident and emergency treatment and with many policies, this covers you for emergency treatment when you’re overseas as well. Also, you’ll have one-off oral cancer cover too.