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Private medical insurance

Private medical insurance

Category: Insurance
Author: Tim Leonard
Updated: 15/02/2018

Private medical insurance (PMI), or private healthcare as it's sometimes called, is designed to cover the costs of private medical treatment for what are commonly known as acute conditions.

Most private medical insurers define an acute condition as a disease, illness or injury that is likely to respond quickly to treatment, allowing you to return to a fit state of health.

They may also be able to cover you up to the point of diagnosis for other conditions not covered by the policy.

Why take out a PMI policy?

Most people buy private medical insurance to gain the reassurance of knowing that treatment is available promptly. As a private medical patient you can often choose when treatment will take place, the specialist who will provide it and the hospital where you'll be treated. However, private medical insurance doesn't come cheap and some people regard it as a luxury, not a necessity.

Private doesn't replace the NHS

It's important to remember that private medical insurance isn't designed to replace all the services offered by the NHS. Some, such as accident and emergency, are beyond the scope of most private hospitals. The NHS also provides comprehensive medical treatment for everyone, regardless of their ability to pay.

Are you covered by your employer's private medical insurance?

Before spending money on private medical insurance it's worth checking to see if you're already covered by your employer (or your partner's employer) through a company private medical scheme. If you are, then great, but it's also worth checking that the levels of cover are adequate for you and your family's needs.

Do you need private medical insurance cover?

This will depend on your own individual circumstances, but you should consider what potential risks are involved. For example, is the peace of mind of being treated quicker than waiting on the NHS worth the cost of private medical insurance? How much would it cost you if you were off work waiting to be treated on the NHS? Or are you a keen sportsperson who wouldn't want to be unable to play sport while sitting on an NHS waiting list?

Will your savings cover you?

If you're concerned about the risk of not being able to work and the associated loss of income, then it's worth considering whether you have sufficient savings to cover private treatment should the need arise.

The general rule of thumb is that you should have six months' salary saved in an emergency fund. However, it's worth bearing in mind that while you can 'pay as you go' for private medical treatment, it's likely to be very expensive. For instance, a hip replacement could set you back around £10,000. Will your savings cover it? If you're concerned about the potential loss of income by being unable to work, then it's worth considering income protection insurance, too.

Do you only need cover when abroad?

If you are mostly concerned about having medical insurance to cover any illness, accidents or injuries while travelling abroad, then it's worth looking at your travel insurance needs first.

Choosing the right cover

There are a large variety of private medical insurance schemes, from low-cost private medical schemes that offer limited cover, to those that offer a wide range of cover. To decide which private medical insurance scheme is right for you, there are a couple of key questions to ask yourself:

  1. Do you want cover that includes seeing a specialist as an out-patient?
  2. Do you want a choice of hospitals, or would you be happy to receive any treatment in a hospital from a limited range chosen by the private medical insurance company?

Ways to reduce your premium

It is worth checking to see if the cost of private medical insurance can be reduced by:

  • paying an excess
  • not choosing to receive treatment at a specified hospital
  • receiving treatment under the NHS when it's available within 6 to 12 weeks
  • paying for part of your treatment
  • choosing a different grade of hospital accommodation.

Shop around for the best private medical insurance deal

The cost of private medical insurance can vary considerably, so it's important to shop around for the best private medical insurance policy to suit your individual needs.

Read the small print

Make sure your private medical insurance policy covers you for what you actually need. For example, out-patient diagnostic tests and consultations, treatment with a specialist, overseas cover and cash payment for treatment as an NHS patient aren't always included.

Make sure you know what isn't covered by your policy

There are a number of illnesses and treatments that are excluded, so make sure you know exactly what cover you're paying for.

The following are normally not covered by private medical insurance:

  • conditions you had before taking out the insurance
  • GP services
  • long-term illnesses that can't be cured
  • accident or emergency admission
  • self-inflicted injuries
  • out-patient drugs
  • infertility treatment
  • normal pregnancy
  • plastic surgery, cosmetic surgery or laser eye surgery
  • preventative treatment
  • kidney dialysis
  • organ transplant
  • injuries sustained from dangerous hobbies.

What next?

If you are interested in taking out a private medical insurance policy, make sure you choose the right level of cover at the right price.

Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.