Protection insurance explained Private medical insurance (PMI)

Chatting nursing staff in a hospital

Health insurance covers you for essential treatments like surgery, consultations, nursing and hospital care

What is private medical insurance?

Private medical insurance is often known as PMI, or more simply 'health insurance'. It pays for private treatment if you fall ill.

Standard PMI policies cover essential treatments, including surgery, consultations, nursing and hospital care. They won't cover drug addiction, cosmetic surgery, 'regular' pregnancy or incurable conditions. 

It also doesn't provide an alternative to your local accident and emergency (A&E) department's services. Comprehensive PMI policies offer additional benefits, ranging from complementary medicine to new cancer drugs and treatments unavailable on the NHS.

What types of private medical insurance can I take out?

There are two types of plan, known as fully underwritten and moratorium. Fully underwritten policies require you to disclose your full medical history to establish what will and won’t be covered. Moratoriums simply impose blanket exclusions on pre-existing conditions going back a set number of years. 

Moratoriums are usually cheaper, but watch out – any disorder that subsequently surfaces won’t be covered if an examination shows it arose during the moratorium period.

Do I need health insurance?

In the UK, the NHS offers free health care at the point of need, so there's arguably no need to take out a private health insurance policy. Reasons cited by people opting for private cover include fear of superbugs such as MRSA, hospital cleanliness and a desire to avoid long waiting lists. 

PMI allows you to receive fast-track consultations and private treatment for short-term, curable medical problems. You'll either be treated privately in an NHS hospital or be booked into a private hospital.

PMI is not an essential insurance product and should below income protection, life insurance and critical illness cover in your list of protection priorities. However, if you have disposable income and your finances are in order, PMI could offer peace of mind.

Medical insurance from your employer

Many employers offer PMI as an optional benefit to staff. PMI from your employer can offer much better value than buying it yourself. For a start, your employer will often pay the premiums for you, although you'll have to pay income tax on the value of the benefit.

The other main advantage of employer-provided PMI is something known as 'free cover'. When you buy a PMI policy yourself, you usually need to go through medical underwriting and pre-existing conditions will be excluded from cover. Many employer-provided schemes will cover you for pre-existing conditions and you won't have to go through medical screening when you sign up for the cover.

How much does PMI cost?

Premiums vary, depending on the level of cover you buy, your age, state of health and whether or not you smoke. Your premiums will tend to go up annually to keep pace with medical costs and because the risk of illness increases with age. Discounts are often available if you agree to pay the first part of any claim, known as an 'excess'.

Many policies also include a no-claims bonus, which rewards you for staying in good health. This feature should not dissuade you from getting suspected problems checked out, so avoid policies that threaten to remove a bonus merely for visiting your doctor.

Looking to buy life insurance?

If you decide you need advice, make sure you consult an independent life insurance broker.

Which? Financial Services can refer you to an impartial, no-obligation third-party advice service to provide you with the best life insurance or mortgage insurance policy tailored to your individual needs. 

Find out more about the life insurance referral service at Which? Financial Services.

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