The largest private medical insurance companies in the UK offer a bewildering range of different schemes and options with premiums that vary significantly. Some of the smaller companies offer a simpler choice of policies, which can be very competitive.
If cost is not an issue, then it is an easy decision to choose one of the fully comprehensive schemes available and select the highest grade of hospital accommodation.
If it is important to you to contain costs, while being clear about what you are covered for, the questions below will help choose a type of policy which has the most suitable level of cover. Then you can compare the premiums charged by different insurers for that level of cover.
Many people who already have private medical insurance are not aware of the different options available to them, even from their existing insurance company. Insurers can be very poor at informing their existing customers about alternative policies or new options. They tend to put their effort into trying to win new customers.
If you already have medical insurance it is possible you could make a significant saving on your existing premiums without compromising the type of protection you require by modifying the cover you receive from your current insurer. The questions below are therefore also applicable to people who already have medical insurance.
The different policies and options offered by medical insurers are all designed to allow lower premiums than are required for maximum coverage by restricting cover in some way. There are four main areas:
Premiums are reduced by applying any one of these restrictions and can be reduced even further by applying a combination of restrictions.
Policies have different features in other areas apart from the four listed above. For example, some offer cover for a limited amount of expenditure on complementary medicine. Some include travel insurance. Some offer a cash benefit if you are treated as an NHS patient. In our view, many people can regard these as peripheral issues. The more expensive policies are more likely to offer these additional features, but they are unlikely in themselves to justify choosing one policy over another.
Another variation which can produce lower premiums is policies with no claims discounts. However, such policies can also sometimes result in higher premiums. Click here to see our analysis of the issues involved in no claims discount policies.
Therefore the key questions to consider are:
This is the most straightforward way of obtaining cover at a lower cost. Excess options are available with most policies from the larger insurers. One important advantage of this approach to reducing premiums is that it does not affect any other aspect of the level of cover or range of hospitals you have chosen. You can choose an excess option for the most comprehensive policy or to reduce the premiums on a budget policy even further.
Choosing an excess option is also an easy way for many existing medical insurance subscribers to reduce their premiums. A high proportion of policies sold over the years have no excess, but can now have an excess applied (although the insurance company has probably failed to notify this option to its existing customers). If you are in this position you can keep the same policy with the same insurer but reduce your premiums if you are prepared to pay an excess yourself.
Typical excess amounts are fairly modest. Most insurance companies apply excesses per year, generally the policy year. Some apply the excess amount to each separate claim. Some also apply the excess amount to monetary benefits they offer, which in some cases means those benefits no longer apply. BUPA offer a wide choice of amounts on most of their policies: £100, £150, £200, £250 and £500. Most people who buy private medical insurance can afford to pay such amounts. They choose medical insurance to protect themselves against the risk of requiring major and expensive medical treatment. The annual savings from choosing an excess can be substantial.
There are also specific High Excess Policies, with excesses from £1000 to £5000, which are best considered as a different category from conventional medical insurance. With these policies, the financial risk being borne by the subscriber is significant and needs to be considered carefully. On the other hand the premium savings with these policies are very high.
Most major insurers offer policies with reduced premiums which specify that a limited network of hospitals are used. The hospitals included in these networks are mostly a selection those operated by the largest hospital groups: BMI, BUPA, Nuffield and Capio Healthcare UK. The majority of these are externally accredited as operating to the highest standards. Each insurer's network is different and it is important when considering this issue to check whether your local hospitals are included. The CareHealth Directory of Private Hospitals shows which hospitals are included in the different schemes offered by the main insurers. The section Hospitals Included in Insurers' Networks provides a detailed analysis of which categories of hospital are available under different policies.
One main difference between insurers' policies with restricted networks and policies allowing a wider choice is that the restricted networks often do not include NHS private patient units. This is an important issue when deciding whether to choose such policies. Some experts argue that the best option when obtaining private medical treatment is to use a private patient unit in an NHS trust hospital because this combines the benefits of private treatment with the back-up resources of an NHS trust hospital should unexpected complications arise. Others argue that leading independent sector hospitals have full back-up resources themselves or have effective arrangements to use the services of nearby NHS trust hospitals.
Another important aspect to the question of which hospitals are included in insurers' networks concerns the leading independent hospitals in London. These are the most expensive hospitals in the UK and are not necessarily included in insurers' networks. If you wish to be covered for treatment at these hospitals you need to check whether they are included in the schemes you are considering. Some schemes include the London hospitals but specify that the patient may be required to share a room. Others require a surcharge to be paid if the London hospitals are included.
Almost all private medical insurance schemes, including the low cost options, cover eligible hospital treatment and out-patient treatment following a hospital stay which is directly related to that stay. Some schemes offer lower premiums by excluding cover for any initial consultation with a consultant you are referred to by your GP and any diagnostic tests before a stay in hospital. Since one of the advantages of private sector treatment is to have a prompt appointment with a consultant, people choosing this option will often pay for this and any necessary diagnostic tests themselves.
The issue is similar to that concerning the option of paying an excess. The cost of an initial consultation is unlikely to be great, although if the consultant recommends an MRI scan, this will cost approximately £500. If your main aim from having private medical insurance is to be protected from large medical bills arising from major treatment, this option is worth considering.
The option of obtaining lower premiums by accepting treatment as an NHS patient if it is available within 6 weeks is a relatively new variation, which is being offered by an increasing number of insurance companies. This is clearly directed at those who see private medical insurance as a way of ensuring that they do not suffer from the delays in seeing a consultant and being treated which can occur within the NHS, rather than those who require the refinements of a private room, choice of menu etc.
One approach which may help clarify which options you believe represent the right balance of insurance cover and acceptable charges is to look at the lowest cost option offered by an insurer for people of your age and then decide what additions you feel are justified.
For example, the minimum cover offered by Norwich Union for someone aged 50 living in central London is Norwich Union Trust Care Starter with a £1000 excess and a monthly premium of £29.
This policy does not cover consultations and tests prior to hospital treatment and restricts the choice of hospital to 90 approved hospitals. There are then many options which broaden the cover obtained by reducing the excess amount, widening choice of hospital and including consultations and tests before treatment. The highest level, offered by Norwich Union Express Care, has no excess, covers consultations and tests before treatment and allows a choice of 350 hospitals. Premiums are £204 a month, which is seven times the level of the minimum option. (It should be noted that premiums are a lot lower outside London, but, at £97, are still three times the minimum.)
These two levels define the extremes and you can then choose which position, perhaps between those extremes, suits you. Of course, the same process applies with policies and premiums from other insurers.