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Medical cover that won't break the bank
By Kirstie Redford
Being able to jump hospital queues and receive treatment in comfortable surroundings makes private medical insurance (PMI) a highly desirable product. However, most of us also regard it as an expensive luxury and rule out buying cover because we think it will be unaffordable.
Tesco attempted to challenge this perception with the launch of a PMI product claiming to cost up to 32% less than comparable cover. Straightaway, however, the experts warned that it failed to offer the best cover levels or the cheapest price. Another concern was that it encouraged customers to buy the cover direct over the phone or online, without professional advice.
But just because the plan failed to impress the experts, doesn't mean there isn't a policy out there that could provide you with a valuable level of cover that doesn't break the bank.
Different insurers view health risks differently and offer a wide variety of cover levels. That means there is no single best-value plan - exactly what works best for you will depend on your own individual circumstances.
There is now a huge choice of PMI plans designed to make cover more affordable - most insurers offer options to help keep premiums down. The best way to find cheap premiums without compromising cover is to buy through an independent broker, who will help you understand exactly what you're getting for your money.
Decide excess level
Low-cost cover doesn't always mean sacrificing benefits. If you're happy to pay for a proportion of your healthcare yourself, then a policy with an excess will help reduce premiums, without losing benefits. Most insurers offer excess options on their PMI products from £50 to around £1,000. Some plans offer even higher excess options up to £5,000.
Like any other type of insurance, the higher the excess, the lower the premium. But whatever excess level you choose, it's vital you have enough spare cash to meet it should you need treatment.
Co-payment plans can also cut premiums. Insurer WPA uses a 'shared responsibility' pricing method, which it claims saves up to 70% on premiums. But remember you still have to foot some of the bill. You agree to pay 25% of all claims until you have reached a maximum annual limit, after which WPA pays 100% of claims until your next plan year starts. You can choose to pay an annual limit of £500 to £5,000 a year - the higher the limit, the lower the premium.
Exeter Friendly Society has a similar option called Shared Care. Like WPA, policyholders pay 25% of costs up to a maximum of £5,000 or can choose to pay 50% of costs up to £10,000. This also has the added benefit of no age-related premium increases.
As insurers increase premiums with age, substantial price hikes often kick in when you reach your fifties and sixties, making cover unaffordable for many policyholders. So Exeter's 'age at entry' pricing, which it applies across all its UK plans, can protect against nasty surprises.
Exclude treatments
The traditional way to push premiums down is by excluding certain treatments or service options. If you don't fancy paying a hefty excess or co-payment, this could be worth considering. Common exclusions include out-patient treatments or restrictions on the choice of hospitals where you receive your treatment.
Low-cost options with cancer exclusions are also emerging. The idea behind cancer exclusions is that the NHS is investing a lot of money in new treatments, so some feel they would rather stick with the NHS for cancer cover, as treatments arguably match or are superior to those available from the private sector.
However, when considering any exclusion, it is crucial to do your homework and find out what your local NHS provision is like, especially regarding waiting lists and availability of new treatments and drugs. After all, the term 'postcode lottery' has been coined for a reason.
Seeking advice from a specialist PMI broker in your area can pay dividends here, as they will be able to share their knowledge of local healthcare provision. This will help you make an informed decision over cover levels and work out which benefits are important to keep intact.
Another way to keep costs down without opting for excesses or exclusions is to take steps to improve your health. One of the most innovative plans to hit the market in recent years is Pru Health's Vitality plan. Policyholders taking active steps towards improving their health - such as stopping smoking or visiting the gym regularly - earn 'vitality points'. The more points you earn, the more savings you make on premiums.
Part-savings, part-insurance
Other less traditional options are emerging that provide policyholders with part-savings, part-insurance. For monthly premiums starting at just £20 - National Deposit's Healthcare Deposit Account allows policyholders to build a savings account to part-fund treatment, while the insurer meets the higher percentage of the costs.
Other money-saving options include plans that provide set cash sums to pay for specific treatments. Insurers provide different bands of cash-benefits for set premiums and policyholders can then shop around for the best value treatment - if you find cheaper treatment, you get to keep the surplus cash.
When you are choosing PMI, remember that the cheapest premium may not always be the best option. As well as your budget, the right policy depends on your own health needs and local NHS provision. It's not simply about cutting costs, but finding the best-value plan for you.
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