Private Medical Insurance (PMI)
Private Medical Insurance (PMI) covers the costs of private medical treatment for easily treatable conditions, frequently referred to as 'acute conditions'. PMI includes the costs of surgery, specialists, accommodation and nursing at a private hospital or in a private ward of an NHS hospital. The plans on offer usually come in two 'flavours'; Standard and Comprehensive.
A Standard Plan covers hospital or emergency treatment, it will include 'in-patient' and 'day-care' treatment only. Comprehensive Plans offer additional coverage to include 'outpatient treatment' and can include dental work, complementary medicine, as well as travel and personal accident cover.
In general, PMI Plans do not cover chronic or critical illness which cannot be cured, for example asthma or diabetes.
PMI premiums are costed on an annual basis, with premiums payable monthly, quarterly or annually. It is often possible to reduce the costs of PMI cover by paying an annual premium, or by implementin an 'Excess' on claims (an 'excess' of £100 means that you will pay the first £100 of every claim that you submit). Insurance companies, as a rule, like excesses, because of the feeling that they prevent excessive and frivolous claims. Some insurance providers will accept new clients at any age but most place upper limits at 65 to 75 years old. Once you are accepted into a plan, the insurer usually continues to offer cover, year on year, albeit at an increasing premium with age. If you receive cover as a perk with your employment and you leave your company, most insurers will offer you and your family cover, but it may be on differing conditions and premiums.
It is crucial to understand the terms on which plans are being offered to avoid problems and disappointments when making a claim. If you have a current PMI Plan but wish to change to another insurer (maybe to save money, receive additional cover or simply to escape from bad service) then it is possible to ensure that you receive a plan on "no worse terms". This simply means that the underwriting company of the new plan, will accept offering you cover on the same terms as the previous plan. If you have had claims and particularly exclusions from cover, these too will be carried forward or considered by the new insurer. This transfer method allows for continuity of cover, particularly if you are presently undergoing treatment or have had treatment in the recent past and are concerned as to a re-occurrence of such a medical problem.
The most frequent and inexpensive way to start a new PMI Plan is by a Moratorium. Providing that you/family are fit and well, with any pre-existing conditions being in the dim and distant past, then this method of taking up medical insurance can be very cost effective. It is extremely important that you understand what a Moratorium is, particularly if your past medical record excludes you from cover in certain areas. When insurerance companies offer these policies, they are taking on clients without the disclosure their medical history. If a moratorium is given for an existing condition, this means that any cover for a pre-existing condition is excluded, then after (usually) 2 years, if the condition has not re-appeared, it will then be covered under the plan. However, most insurers reserve the right to exclude certain conditions indefinitely if they think there is a real risk of them re-appearing and triggering large claims.
Private Medical Insurance can be a complicated area, because each insurer tends to offer different benefits under different names. This is quite different from life assurance under which benefits will only be paid out on one condition - namely death.
It could be possible that your employer provides you with some of these benefits as part of your employment package. Life Assurance (often known as Death-In-Service schemes), PHI and Medical Insurance plans are often provided at the employers cost, and employees are enrolled automatically. If you are unsure, it is worth finding out if any arrangements are in place. If one (or more) is in place, it is worth finding out exactly what is provided - as they could provide benefits anywhere on the spectrum from excellent to minimal; if the benefits are on the minimal side, it could be beneficial to supplement them with an additonal personal plan to cover any shortfall - just because an employers scheme is in place, it does not automatically mean that you would be provided with the level of cover that suits your personal needs.
If you wish to discuss the issue of protecting you or your family / partner / business against the serious consequences that illness or early death can bring along, we recommend that you seek independent financial advice.
NOTE: This document is intended to provide a brief overview of the subject. It should not be read as a recommendation to use any particular product, as it does not take into account individual circumstances and attitudes.
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