UK health insurance

UK health insurance, health assurance, private medical cover, health and dental insurance

Whatever government is in power, it seems that the National Health Service is a financial thorn in its side. When Tony Blair’s New Labour swept into office, one of its priorities was to address the chronic underfunding of the NHS and usher in a new bright era for those who worked in the service and those who used it.

Unfortunately, it has had limited success. Long hospital waiting lists remain as big a problem as ever while stories of patients waiting on trolleys in corridors for treatment because no beds are available are commonplace. Treatments and drugs available vary from NHS region to region and you could find yourself excluded on financial grounds under the so called 'postcode lottery'. In light of such events sales of UK health insurance should be booming as people seek to jump the long queues and receive medical care in more comfortable surroundings than the average Health Service hospital ward.

Yet this is not the case. After the boom of the Eighties, sales of UK health insurance have remained stagnant since the early Nineties. In theory, UK health insurance makes good sense, providing a cast-iron guarantee that you will receive medical treatment where and when you want it.

But in practice the companies that dominate the market have not made UK health insurance user-friendly. Many UK health insurance policies have more holes, or exclusions, than a Swiss cheese and premiums are not cheap. Indeed, the sector has consistently incurred the wrath of the Office of Fair Trading which belives that too many UK health insurance products are too complex. The path to UK health insurance should be trodden with care.

UK health insurance: key questions and answers

Q What is UK health insurance?
A It is a form of insurance intended to cover the costs of medical treatment for curable, short-term medical conditions – often referred to as acute conditions. UK health insurance will usually cover the costs of medical specialists, surgery, accommodation and nursing, drugs and X-rays. UK health insurance does not tend to cover the cost of treatment of incurable long-term illnesses such as asthma, diabetes or multiple sclerosis. Such ailments are referred to as chronic illnesses.

Q What types of treatment are covered by UK health insurance?
A It depends upon the policy. Hospital treatment falls into three broad areas:

1. In-patient treatment. Patients are required to stay overnight for treatment. Most policies cover this.

2. Day-patient treatment. Patients are admitted to hospital for treatment that requires occupation of a bed, but are not required to stay overnight. Such treatment is often referred to as day-care or day-case. Most policies cover this.

3. Out-patient treatment. Patients receive treatment at a hospital that does not require occupation of a bed. Many policies do not cover this.

Q Do UK health insurance policies, like other forms of insurance, have exclusions?
A Yes. Though the range of exclusions varies from insurer to insurer, common conditions that UK health insurance policies will not cover include alcoholism, drug abuse, dental treatment, general practitioner services, HIV/AIDS, infertility, normal pregnancy, sterilisation and cosmetic surgery.

Q How long do UK health insurance policies run?
A They are annual contracts, but most insurers will automatically renew cover each year provided you have paid all the premiums. However, your premium may jump in price from year to year. In the past, increases have been above the rate of inflation as a result of soaring healthcare costs.

Q Does that mean I have to pay UK health insurance premiums annually?
A No. Most insurance companies allow you to pay premiums on a monthly basis, enabling you to spread the cost of cover throughout the year.

Q Are there UK health insurance policies that cover the whole family>
A Yes. There are UK health insurance policies for single people, single parents, married couples, couples and families. Some UK health insurance companies provide children with free cover.

Q Is there an upper age limit above which I cannot take out UK health insurance?
A Most UK Health insurance companies will not issue new policies to people above 75.

Q What determines the size of my UK health insurance premium?
A The major influence will be the level of cover and benefits you require. UK health insurance policies that cover a wide range of medical conditions and offer a choice of hospitals will demand higher premiums than those where the treatments covered are restricted or where the choice of hospitals is limited. Your age will also be taken into account in determining UK health insurance premiums – the older you are, the higher your premiums. Many insurers have introduced UK health insurance policies under which medical treatment will be granted only if there is a NHS waiting list longer than six weeks for the operation you require. These UK health insurance policies tend to have lower premiums. You may cut the cost of monthly premiums by agreeing to pay an excess every time you make a claim.

Q Is it possible to categorise UK health insurance policies?
A It is not easy. Broadly speaking, UK health insurance policies fall into three categories – comprehensive, standard and budget. Comprehensive plans tend to cover the full cost of basic medical services such as hospital accommodation, surgeons’ and anaesthetists’ fees, drugs and dressings and out-patients services. They also cover such things as the use of alternative medicines and osteopathy. In contrast, budget plans generally provide full refunds for basic services, but offer limited out-patient services and few extras. Standard plans fall between the two and offer more restricted out-patient services and fewer frills than comprehensive plans. Unfortunately, one company’s standard plan is another’s comprehensive policy so you need to exercise great care when choosing cover.

Q How do I apply for UK health insurance?
A All insurers will ask you to complete an application form. This will form the basis of the contract you make with the insurer so it is imperative you provide all the information required. If nay details turn out to be inaccurate, your insurer may invalidate a claim.

Q Will I need to provide details of my current health when I apply for UK health insurance policies.
A It depends. Insurance companies issue policies in two different ways. The first method requires full details of your medical history. Depending upon the information you supply, you may be required to undergo a medical examination. If you have suffered from specific illnesses in the past, the insurer will exclude these from your medical cover – either for good or for a limited period – or it will charge an extra premium.

The second method is for the insurance company to issue a policy immediately. However, this will not cover you for the subsequent treatment of illnesses that you have suffered in your immediate past – usually the past five years. Such pre-exisitng conditions will be covered only when you have remained free of symptoms, treatment, medication, tests and advice for about two years after your policy has started. Theses policies are issued on a moratorium basis.

Q What UK health insurance policies are best?
A While cover from a moratorium policy is easier and quicker to get, such policies can cause heartbreak when you discover that a claim will not be met. A policy that requires you to make a medical declaration before cover is granted offers the assurance of knowing where you stand – provided that you fill in the form correctly. Failure to disclose key details could jeopardise future claims.

Q Can I take out a UK health insurance policy if I am disabled?
A Yes. You should disclose your disability. Most insurers will exclude from your cover treatment of any medical conditions arising from your disability, but will allow you to claim for treatment that is unconnected with it.

Q What happens if I am asked to work abroad? Will my cover still be valid?
A Most schemes do not provide cover for policyholders who are working abroad permanently. Cover for temporary overseas workers is more common though the trip must not exceed a fixed period, usually 30 days. Some plans provide cover for treatment needed while on holiday abroad.

Q Can I switch insurers?
A Yes, though you should tread with caution. By taking out cover with another provider you may lose cover for existing medical conditions that your previous insurer provided. The promise of lower premiums elsewhere does not always mean a better deal for you – and it probably means less cover.

Q How do I make a claim on UK health insurance?
A Your insurer should provide the details when you take out a UK health insurance policy. Always contact your insurance company before receiving any medical treatment. By doing this you will avoid incurring bills that your insurer will not meet. Your insurer will confirm cover of your treatment, advise you of any limits on specialists or hospitals you may use and how the medical bills will be paid. Most good insurance companies provide telephone helplines to assist you in making a claim.

Q When I claim on a UK health insurance policy, can I go to the hospital of my choice for treatment?
A It depends upon the UK health insurance policy. Some restrict hospital choice so it makes sense to check first. Some also restrict the type of accommodation for which you are eligible while in hospital. Check out this information before buying a UK health insurance policy.

Q What happens if I buy a UK health insurance policy but later decide it is not for me?
A Most policies include a cooling-off period – usually two weeks – to cancel your UK health insurance policy from the time you receive the documents. If you cancel within this period, any premiums already paid will be refunded. After that the insurer is not obliged to refund your premiums.

Q What happens if I take out a UK health insurance policy with which I am subsequently unhappy?
A As with any form of insurance, you have the right to complain. You should first contact the person or company which sold you the policy, preferably putting your complaint in writing. If it is not resolved, the company should refer you to and provide details of an independent complaints body. In most cases, this will be the Insurance Ombudsman at South Quay Plaza, 183 Marsh Wall, London E14 9SR, tel. 0845 600 6666 or the Personal Insurance Arbitration Service at 12 Bloomsbury Square, London WC1A 2LP, tel. 020 7421 7444. These schemes are being embraced within the Financial Ombudsman Service.

Q Can I get tax relief on premiums?
A No. Tax relief used to be available to the elderly but this has been stopped. Benefits are tax-free.

Q Who offers UK health insurance policies?
A The two biggest insurers are BUPA (British United Provident Association) and the PPP (Private Patients Plan). Other players include Abbey Life (part of Lloyds TSB), Allied Dunbar (part of Zurich), Clinicare, Exeter Friendly, Prime Health (part of Standard Life), Norwich Union, OHRA, Royal & SunAlliance and WPA (Western Provident Association).

Q How do I buy a UK health insurance policy?
A Though UK health insurance may be bought over the telephone, it makes sense to seek financial advice before choosing a particular policy. Individual plans vary greatly and simply opting for the UK health insurance policy with the lowest premium may prove a big mistake; there is no point buying a low-cost policy that contains so many exclusions that making a claim becomes extremely difficult.

An independent financial adviser will examine individual UK health insurance policies and tell you which offers the best value for money. He or she should also explain the baffling jargon used by UK health insurers – usually to mislead you.

For a list of Associtaion of British Insurers members who sell UK health insurance write to the ABI, 51 Gresham Street, London EC2V 7HQ.

Q If my employer offers UK health insurance cover should I take it?
A The answer is invariably yes. Because your company obtains cover at group rates from the insurer; the deal it offers you will probably represent great value for money.

Q Are there alternatives to UK health insurance?
A Yes. Some private-sector hospitals offer interest-free credit schemes that allow you to spread payment of your medical bills over a fixed period, typically a year. Such schemes do not address the financial problems that a long stay in a private hospital may bring – they simply spread the financial pain over a longer period.

Hospital cash plans are a further option. These pay a tax-free sum for every day you are treated as an in-patient or day-patient in either an NHS or a private hospital. Other cash benefits may be payable for treatments such as dental work. But such plans are no match for private medical costs insurance because of the low benefits on offer. At the other extreme, major medical expenses cover can be bought that will provide a tax-free cash sum if you undergo surgery. But this offers no guarantee that the cost of private treatment will be met and fails to provide cover for non-acute operations.

Q How much does UK health insurance actually cost?
A shop around and compare health insurance quotes for the latest premium prices

Dos and Don’ts

• Do remember that UK health insurance premiums have traditionally risen above inflation. What may appear affordable insurance now may become and expensive luxury in the years ahead.

• Don’t take out the first policy you are offered. Shopping around for UK health insurance is an absolute must. No two policies are the same – it will pay you to take your time, seek advice and find a plan that fits your requirements.

• Do find out from your insurer whether there is a cap on the maximum benefit payable in any one year. Some insurers impose a ceiling on benefit payable in any one year. Some insurers impose a ceiling on benefits and that means there is no gurantee that your private medical bills will be met.

• Do ask your insurer whether your UK health insurance policy has a waiver of premium option. This benefit means an insurer will meet the cost of paying for your premiums if you are unable to work after making a claim for in-patient treatment. It is an attractive policy feature, but it adds to the overall cost.

• Do check whether your policy has a no-claims discount. Some UK health insurers will reduce premiums for policyholders who make no claims for years.

• Don’t be afraid to ask questions. UK health insurance is rife with impenetrable jargon and policy exclusions. If you don’t understand a company’s marketing literature, ask your independent financial adviser of the company for an explanation. Jargon is often used to hide important facts.

• Don’t take out UK health insurance without considering other types of protection – they may be more appropriate. It may make better sense for you to increase the amount of life cover you have, especially if you have young children. Alternatively, it may be more appropriate for you to arrange financial protection to cover a period of long-term illness.

• Do opt for a joint policy rather than two individual UK health insurance policies if you are married. It should work out cheaper.

• Don’t be persuaded into switching UK health insurance policies. Switching may be in the interests of the salesman but it will invariably not be in yours – you will lose a host of benefits.

Did you know?

• DID you know that about 14% of the UK population has access to some form of UK health insurance either through an employer or by arranging their own cover?

• DID you know that about 3.5% of the £40 billion we spend every year on healthcare is funded by some form of UK health insurance?

• DID you know that more than 50% of UK health insurance policies are employers’ schemes with contributions paid either by the employer or jointly by the individual and the employer? If your employer offers such a scheme, join it. The alternative is to take out an individual plan where you pay all the premiums.

• DID you know that UK health insurance sales total about £1.7 billion a year?

• DID you know that UK health insurance can be bought in three main ways? It can be bought over the telephone in much the same way as many people arrange their household or car insurance. It can also be bought through an independent financial adviser who will search for the best deal for you. Finally, it may be obtained from a company salesman who will sell you his company’s insurance, irrespective of how good the policy is. Independent financial advice is the best way.

• DID you know that sale of UK health insurance are not covered by the Financial Services Act? This means that salesmen do not have to disclose how much commission they are paid for selling individual plans.

The Prudential