This content is for information and educational purposes only. It should not be taken as financial advice or investment advice. To receive tailored, regulated financial advice regarding your affairs please consult us here at Hanson Financial Services (financial advice in Liverpool).
We have the NHS here in the UK; free medical care at the point of use. Why, then, would there be any need for private medical care and insurance? This, and other questions, are often asked about private medical insurance (PMI). As financial advisers who are often involved with helping people in Liverpool arrange these policies as part of their financial protection plan, we wanted to offer some answers to commonly-asked questions about PMI. We hope you find this content useful and invite you to contact us if you’d like to discuss your financial protection strategy.
What is private medical insurance?
Sometimes simply shortened to “health insurance”, PMI is an insurance policy which helps pay for your medical bills from the private sector. It is typically focused on assisting with the cost of treatment for “acute” conditions – i.e. illnesses or injuries which are deemed curable and fast to treat. As such, conditions defined as “chronic” (e.g. Alzheimer’s) are not usually covered and so will require help from the NHS.
Why are chronic conditions not covered?
Chronic conditions typically involve much higher treatment costs compared to acute conditions. As such, by limiting their policies to only covering the latter, PMI providers can keep their costs down for customers. If chronic conditions were included then this would lead to more claims, requiring the company to pay out more. For many insurers, this might jeopardise their profits. For more stable insurers, however, it would mean passing this higher cost onto the customer in order to remain profitable.
Why choose PMI when we have the NHS?
The NHS covers most medical treatments for free, so PMI should certainly be classed as a “luxury” which can be “useful to have” rather than “necessary” (like car insurance). Broadly speaking, however, there are at least three good reasons to consider taking out PMI if you can afford it. Firstly, it provides a wider range of choice for patients. PMI can open up more options for where you want to be treated, and who treats you. Secondly, the private sector can open up faster treatment – particularly where NHS waiting lists are long. Thirdly, the quality of medical care in the private sector can be higher and offer specialist facilities for specific conditions.
Which costs are covered by PMI?
One great benefit of the NHS is that you can be very confident that there will be no unexpected, crippling costs thrust upon you for receiving treatment. With private medical care, however, you need to be more careful. PMI does not cover everything, but can help with costs such as:
- Tests & surgery. You will likely be covered by PMI if you go in for tests or surgery as an inpatient or day patient.
- Hospital accommodation. This helps cover the costs of staying the night in hospital.
- Acute stages of a chronic condition. Whilst PMI will not cover a chronic condition, it may help you through the initial steps of diagnosing it and trying to address it.
- Tests, outpatient surgery and consultations. Here, your PMI can help cover the costs of “policy add-ons”, such as physiotherapy.
How can I reduce my PMI costs?
Partly, the cost of PMI depends on the comprehensiveness of the cover. The more extensive this is, as a general rule, the more you are likely to need to pay. However, there are usually ways to help reduce the cost of PMI without reducing your financial protection. For instance, increasing the excess on your plan can help. This means that you will need to contribute should you need to make a claim, but can lower your premiums.
You can also reduce your costs by limiting the number of hospital options covered by your plan. However, you do need to be careful, since in some parts of the UK may need to upgrade to get care in the largest hospitals (e.g. London). Other ways to save costs is to keep your claims low. The fewer your past claims, the cheaper PMI is likely to be. Finally, make sure you check your employment benefits to see if these include any financial assistance for private treatment. This can reduce the need for your own policy.
What can I reasonably expect to pay?
The average cost for PMI is about £1,500 per year, which equates to approximately £125 per month. However, the cost can be much higher – or lower – depending on the policy and your circumstances. For instance, if you have a history of pre-existing medical conditions then this suggests you may be more likely to develop further health problems. As such, your premiums could be higher for someone with fewer past medical issues. A non-smoker will likely enjoy a cheaper range of PMI options compared to a smoker.
Conclusion & invitation
Are you interested in talking to a financial adviser about your pension and investment planning needs? We’d love to assist you here at Hanson Financial Services.
Please contact us to arrange a consultation with our team – free and without obligation – to gain more clarity and peace of mind over your financial plan.
You can call us on:
Liverpool Office: 0151 708 7616
Manchester Office: 0161 401 0991
Chester Office: 01244 960 039
Or email via: [email protected]