Private Medical Insurance Guide
Understanding Private Health Insurance and How It Can Support Your Healthcare
When people think about financial protection, they often think about life insurance, critical illness cover or income protection.
Private Medical Insurance serves a different purpose.
Rather than providing a lump sum following death or diagnosis of a specified critical illness, or replacing part of your income when you cannot work, Private Medical Insurance is designed to help with the cost of eligible private medical treatment, subject to the terms of the policy.
For some people, the attraction is greater choice over where and when eligible treatment takes place. For others, it is access to private consultations, diagnostics, treatment or specialist care covered by their policy.
Private Medical Insurance does not replace the NHS. Instead, it can provide another route to eligible healthcare alongside the services available through the NHS.
This guide explains how Private Medical Insurance works, what it can and cannot cover, the choices available when arranging a policy and why the cheapest policy is not necessarily the most appropriate one.
What Is Private Medical Insurance?
Private Medical Insurance, commonly abbreviated to PMI, is a type of health insurance designed to cover some or all of the cost of eligible private medical treatment.
You normally pay a monthly or annual premium.
If you subsequently need eligible treatment and your claim meets the terms of the policy, the insurer can cover the relevant costs according to the level of cover selected.
Exactly what is covered varies considerably between insurers and policies.
That makes understanding the policy particularly important.
What Can Private Medical Insurance Cover?
Depending on the insurer and level of cover selected, a policy may provide access to services such as:
specialist consultations;
diagnostic tests;
scans;
hospital treatment;
surgery;
cancer treatment;
therapies;
mental health treatment; and
other eligible private healthcare.
This does not mean every PMI policy includes all of these benefits.
Some may be standard features, some may be optional, and others may be subject to limits or exclusions.
What Is Acute Medical Treatment?
Private Medical Insurance is generally designed primarily around eligible acute medical conditions.
An acute condition is broadly a disease, illness or injury that is expected to respond to treatment intended to restore health or return the individual towards their previous state of health.
This distinction matters because PMI is not generally designed to provide unlimited treatment for every ongoing medical condition.
The insurer's policy wording determines what is covered.
Private Medical Insurance and Chronic Conditions
One of the most important areas to understand is the treatment of chronic conditions.
A chronic condition can involve ongoing symptoms, monitoring or treatment over a prolonged period.
Private Medical Insurance is generally not intended to provide indefinite treatment for chronic conditions.
There may nevertheless be circumstances where elements of investigation or treatment are covered.
The precise approach depends on the insurer, medical circumstances and policy wording.
Does PMI Cover Pre-Existing Medical Conditions?
This depends on the underwriting method and policy.
Private Medical Insurance should not automatically be assumed to cover medical conditions that existed before the policy started.
When arranging cover, the insurer's approach to previous medical history needs to be understood carefully.
This is particularly important for anyone considering moving from one insurer to another.
How Is Private Medical Insurance Underwritten?
There are different ways an insurer may assess medical history.
The underwriting method can affect what is covered and what may be excluded.
Understanding this is just as important as comparing premiums.
Full Medical Underwriting
With full medical underwriting, you provide information about your medical history when applying.
The insurer assesses that information and can explain the terms it is prepared to offer.
This can provide greater clarity at the outset about medical exclusions.
However, the outcome depends on the medical information disclosed and the insurer's underwriting approach.
Moratorium Underwriting
Moratorium underwriting generally works differently.
Rather than fully assessing and confirming all medical history at the beginning, the policy applies rules relating to medical conditions experienced before cover began.
Whether a previous condition can later become eligible for cover depends on the policy's moratorium rules and the individual's subsequent medical history.
The exact wording matters.
Why Underwriting Matters
Two policies with similar premiums can produce very different outcomes depending on how medical history is treated.
Before choosing a policy, it is important to understand:
What medical conditions are excluded?
Can exclusions potentially be reviewed?
What information needs to be provided?
How are previous symptoms treated?
What happens if you switch insurer?
Price alone cannot answer these questions.
Switching Private Medical Insurance
Changing provider can sometimes reduce premiums or provide different benefits.
But switching should be approached carefully.
An existing policy may provide cover for medical circumstances that a new insurer would treat differently.
Changing insurer without understanding the underwriting implications could result in losing valuable existing cover.
Never cancel an existing policy simply because another quotation appears cheaper.
The replacement terms should be understood first.
What Is an Excess?
An excess is an amount you agree to contribute towards eligible claims according to the terms of the policy.
Selecting a higher excess can sometimes reduce the insurance premium.
However, it also means accepting a greater financial contribution if treatment is required.
The appropriate excess therefore depends on both budget and how much you would comfortably be able to pay when making a claim.
Hospital Lists
Some PMI policies provide access to a particular network or list of private hospitals.
Different policies may offer different hospital options.
A broader hospital list may provide greater choice but can affect the premium.
When selecting cover, consider whether access to particular hospitals or locations is important to you.
Consultant and Specialist Choice
Depending on the policy, there may be different arrangements regarding which consultants or specialists can provide treatment.
Some policies provide broader choice.
Others may use defined networks or guided pathways.
Neither structure should automatically be assumed to be better for everyone.
The important question is whether the arrangement matches your priorities.
Outpatient Cover
Outpatient treatment is an important area of PMI.
It can include services such as:
specialist consultations;
diagnostic tests;
scans; and
certain therapies.
Some policies may provide extensive outpatient benefits.
Others may apply monetary limits or different restrictions.
This can have a significant impact on both premium and practical cover.
Inpatient and Day-Patient Treatment
Inpatient treatment generally involves admission to hospital where an overnight stay is required.
Day-patient treatment generally involves admission for treatment without remaining overnight.
Private Medical Insurance can provide cover for eligible hospital treatment according to the policy terms.
The hospital, treatment, specialist and authorisation requirements should be checked.
Diagnostic Tests and Scans
Finding out what is wrong can sometimes be as important as the treatment itself.
Depending on the policy, PMI may provide access to eligible diagnostics such as scans and other investigations.
However, diagnostic benefits can vary between policies.
It is worth checking whether there are limits and whether particular pathways need to be followed.
Cancer Cover
Cancer treatment is understandably one of the areas people frequently ask about when considering Private Medical Insurance.
Different insurers can provide different levels and structures of cancer cover.
Depending on the policy, cover may potentially include eligible:
investigations;
surgery;
chemotherapy;
radiotherapy;
specialist treatment;
drugs; and
follow-up care.
There can be important differences between policies, including treatment limits and how particular therapies or drugs are handled.
Cancer cover should therefore be compared on its actual terms rather than simply whether a policy says it includes cancer treatment.
Mental Health Cover
Mental health benefits are available on some Private Medical Insurance policies.
Depending on the insurer and policy, this could potentially include eligible:
consultations;
therapy;
outpatient treatment; or
inpatient treatment.
Limits and definitions vary.
If mental health cover is particularly important to you, this should be considered when selecting the policy rather than assumed to be included automatically.
Physiotherapy and Other Therapies
Some policies can provide access to eligible therapies such as physiotherapy.
This may be particularly relevant for people concerned about musculoskeletal problems or recovering from certain injuries.
The number of sessions, monetary limits and referral requirements can vary between policies.
Private Medical Insurance and the NHS
Private Medical Insurance should not be viewed as a replacement for the NHS.
Policyholders can still use NHS services.
There may also be circumstances where treatment remains more appropriate through the NHS.
Private Medical Insurance provides an additional healthcare option for eligible treatment rather than removing access to public healthcare.
Do You Need a GP Referral?
The process for accessing treatment varies according to the insurer and policy.
Depending on the arrangement, a referral or another form of clinical assessment may be required before certain treatment is authorised.
Insurers increasingly use different healthcare pathways, so the process should be checked against the actual policy rather than assumed.
Always Check Before Receiving Private Treatment
Having Private Medical Insurance does not mean every private medical bill will automatically be paid.
Before arranging non-emergency private treatment, policyholders should normally follow the insurer's claims and authorisation process.
The insurer can confirm whether the proposed treatment is eligible under the policy and explain any applicable limits or contributions.
Receiving treatment first and checking afterwards can create the risk of unexpected costs.
What Isn't Normally Covered?
Exclusions vary between insurers, but PMI is not designed to cover every possible healthcare expense.
Depending on the policy, limitations may apply to areas such as:
pre-existing conditions;
chronic conditions;
routine pregnancy and childbirth;
routine dental treatment;
routine optical treatment;
cosmetic procedures;
experimental or unapproved treatment; and
other excluded services.
Some insurers may offer additional benefits or optional cover in particular areas.
The actual policy wording should always be checked.
Private Medical Insurance for Individuals
Individual PMI can be arranged for one person.
When considering cover, think about:
medical history;
budget;
hospital preferences;
outpatient requirements;
cancer cover;
mental health benefits;
excess; and
other healthcare priorities.
There is rarely a single policy structure suitable for everyone.
Private Medical Insurance for Couples
Couples may want to consider arranging cover together.
However, each person still has their own medical circumstances.
One partner's underwriting outcome may therefore be different from the other's.
The policy should be considered based on both individuals rather than assuming identical medical terms.
Private Medical Insurance for Families
Family PMI can potentially provide private medical cover for parents and children under one arrangement, subject to the insurer's eligibility requirements.
Parents may particularly value access to eligible consultations, diagnostics and treatment for their children.
However, benefits, age limits and underwriting arrangements vary.
The policy should therefore be assessed according to the family's priorities.
Private Medical Insurance for Children
Children can potentially be included within family medical insurance arrangements, subject to insurer rules.
The cover available can differ from one policy to another.
Parents should consider what they actually want the policy to provide rather than choosing solely according to premium.
Private Medical Insurance for Self-Employed People
For somebody who is self-employed, prolonged disruption caused by illness can have financial consequences beyond the medical problem itself.
Access to eligible private diagnosis and treatment may therefore form part of their wider protection planning.
However, PMI does not replace lost income.
A self-employed person may also need to consider income protection separately.
Private Medical Insurance for Company Directors
Company directors can consider PMI as part of their wider personal and business protection arrangements.
Depending on the circumstances, medical insurance might be arranged personally or through a business.
Where the company is paying for medical insurance, accounting and tax implications should be considered.
The appropriate structure depends on the circumstances and current rules.
Company-Paid Private Medical Insurance
A company may provide Private Medical Insurance for directors or employees.
This can form part of an employee benefits package.
However, company-paid PMI can have tax implications for the business and employee.
The treatment depends on the arrangement and rules applying at the time.
An accountant or tax adviser should be consulted where appropriate rather than assuming a particular tax outcome.
PMI vs Life Insurance
Private Medical Insurance and life insurance solve completely different problems.
Private Medical Insurance helps with the cost of eligible private medical treatment.
Life insurance generally provides a financial benefit following death during the policy term, subject to the policy conditions.
Someone may therefore have a genuine need for both.
PMI vs Critical Illness Cover
This is another important distinction.
Critical illness cover generally provides a lump-sum benefit following diagnosis of a specified condition where the policy definition is met.
PMI is designed to fund eligible medical treatment according to the policy.
One provides financial support following a qualifying diagnosis.
The other helps fund eligible private healthcare.
They are not interchangeable.
PMI vs Income Protection
Income protection is designed to provide a regular financial benefit if illness or injury prevents the insured person from working and the policy definition is satisfied.
PMI is designed to help fund eligible private medical treatment.
Imagine somebody is unable to work because of a medical condition.
PMI could potentially help with eligible diagnosis and treatment.
Income protection could potentially help address the loss of earnings.
They deal with different parts of the same wider financial risk.
Building a Wider Protection Plan
Protection does not necessarily mean choosing one policy.
Different risks require different solutions.
A protection review might consider:
what happens if you die;
what happens if you develop a serious illness;
what happens if you cannot work;
how eligible private treatment could be funded;
what protection your employer already provides;
what savings are available; and
what financial commitments need protecting.
The objective is to identify the risks first and then decide which ones are important enough to insure.
Does PMI Guarantee Faster Treatment?
Private healthcare can provide an alternative route to eligible consultations, diagnostics and treatment.
However, it would be inappropriate to assume that every person, condition or treatment will always be seen more quickly simply because they have insurance.
Availability depends on factors including:
medical speciality;
location;
consultant availability;
hospital availability;
urgency; and
policy terms.
PMI provides access to eligible private healthcare according to the policy rather than guaranteeing a particular waiting time.
Why the Cheapest PMI Policy May Not Be the Best Fit
Two quotations can look similar until the benefits are examined.
Differences could include:
hospital access;
outpatient limits;
excess;
cancer benefits;
mental health cover;
therapies;
underwriting;
medical exclusions;
consultant access; and
claims pathways.
A cheaper policy that excludes something important to you may offer poor value despite having the lowest premium.
What Affects the Cost of Private Medical Insurance?
Premiums can be influenced by several factors.
These can include:
age;
location;
number of people covered;
level of cover;
hospital access;
outpatient benefits;
excess;
underwriting;
optional benefits; and
insurer pricing.
Premiums can also change over time.
The price paid when the policy starts should not be assumed to remain unchanged indefinitely.
Why Can PMI Premiums Increase?
Health insurance premiums can change for a variety of reasons.
Factors can include:
increasing age;
medical-cost inflation;
claims experience where relevant to the arrangement;
changes to insurer pricing;
changes in benefits; and
wider healthcare costs.
A policy should therefore be reviewed periodically rather than judged solely on its first-year premium.
Should You Increase the Excess to Reduce the Premium?
Increasing the excess can sometimes reduce the premium.
But the saving should be considered alongside the amount you would need to contribute when claiming.
An excess should generally be set at a level you could comfortably afford if treatment were required.
Reducing the premium is of limited benefit if the resulting excess makes using the policy financially difficult.
Review Private Medical Insurance Regularly
A review can be useful when:
premiums increase significantly;
family circumstances change;
children need adding or removing;
employment changes;
company benefits change;
healthcare priorities change;
the business begins paying for cover; or
existing benefits no longer appear appropriate.
However, reviewing a policy does not automatically mean changing insurer.
Existing medical history needs to be considered before replacement.
Be Particularly Careful When Switching Insurer
A new policy can have a lower premium but different underwriting.
Medical conditions covered by an existing policy may not necessarily receive the same treatment under a replacement policy.
Before changing cover, establish:
What do I currently have?
What medical history exists?
What will the new insurer cover?
What could be excluded?
Are the hospital and outpatient benefits comparable?
Only then can the policies be meaningfully compared.
Don't Cancel Existing PMI Before Replacement Cover Is Confirmed
If moving insurer, the existing policy should not simply be cancelled because a quotation has been obtained elsewhere.
The new policy terms, underwriting basis, start date and relevant exclusions should first be understood.
Maintaining continuity can be particularly important where medical history is involved.
A Private Medical Insurance Review in 10 Steps
Step 1: Decide Why You Want PMI
Identify what you want private medical insurance to achieve.
Step 2: Review Existing Healthcare Benefits
Check whether you already receive medical insurance or healthcare benefits through employment.
Step 3: Consider Who Needs Cover
Decide whether protection is required for you individually, a couple or the wider family.
Step 4: Consider Your Medical History
Understand how previous conditions could affect underwriting.
Step 5: Consider Hospital Choice
Decide how important access to particular hospitals or locations is.
Step 6: Consider Outpatient Cover
Think about consultations, diagnostics and scans rather than concentrating only on hospital admission.
Step 7: Review Additional Benefits
Consider whether cancer, mental health, therapies or other benefits are particularly important.
Step 8: Choose an Affordable Excess
Balance premium savings against what you could realistically afford when claiming.
Step 9: Compare Cover, Not Just Price
Look at the actual policy terms and benefits.
Step 10: Review the Policy Regularly
Reassess the arrangement as premiums, health circumstances and family requirements change.
Private Medical Insurance Checklist
Before selecting a policy, ask:
Who needs to be insured?
What do I want the policy to achieve?
How will my existing medical history be treated?
What underwriting method applies?
Which hospitals can I use?
How does outpatient cover work?
Are diagnostic tests and scans covered?
What cancer cover is included?
Is mental health treatment included?
Are therapies covered?
What excess applies?
What are the main exclusions?
How do I obtain authorisation for treatment?
What happens if I move insurer?
How could premiums change over time?
These questions provide a much better basis for comparing PMI than premium alone.
Speak to Cambs Ely Mortgages About Private Medical Insurance
Private Medical Insurance can be considered on its own or as part of a wider protection review.
The important starting point is understanding what you want the policy to achieve, who needs protecting, your healthcare priorities, existing benefits and budget.
We can consider Private Medical Insurance alongside life insurance, critical illness cover, income protection and business protection where appropriate, helping you understand how the different types of cover perform different roles.
Cambs Ely Mortgages provides protection advice to individuals, families, self-employed people, company directors and business owners in Ely, Cambridge, Cambridgeshire and across England, with remote appointments available.
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Important Information
The information contained in this guide is intended for general educational purposes and does not constitute personalised financial, insurance, medical, legal, accounting or tax advice.
Private Medical Insurance policies vary significantly between insurers. Cover, exclusions, hospital access, outpatient benefits, cancer cover, mental health benefits, excesses, underwriting and claims procedures depend on the insurer, policy and individual circumstances.
Private Medical Insurance is not designed to replace emergency medical services or all services provided by the NHS. If you require medical advice or treatment, you should consult an appropriately qualified healthcare professional.
Pre-existing and chronic conditions may be subject to restrictions or exclusions depending on the policy and underwriting method.
Where insurance is provided through a business, tax treatment depends on the arrangement, individual circumstances and rules applying at the relevant time. Tax rules can change.
Do not cancel existing medical insurance until any replacement cover, underwriting terms and start date have been confirmed and the consequences of changing insurer are understood.