ukhealthinsurance

Health insurance:Your 9 need-to-knows

Health insurance covers the cost of private medical treatment and people who buy it typically do so because they receive faster consultations and private treatment, which can be in a private or NHS hospital.

While it can cover the cost of private day patient surgery, tests and hospital accommodation, you wouldn't be able to use it if you were taken to accident and emergency.

Here are nine need-to-knows to help you decide if it's right for you and where to find the best cover at an affordable rate.

You may not need health insurance as many things are covered by the free NHS

The UK is one of a handful of countries in the world which providers people with free NHS treatment at the point of service covering so paying for private healthcare is a luxury not a necessity.

There are also a number of policy restrictions with health insurance, so even if you have cosmetic treatment, accident and emergency treatment, or an organ transplant, for example, you won't be covered, so make sure you NEED it before you buy.

Self-insuring could be a better option and you'll keep the cash if you don't claim

If you're young and healthy you might not need health insurance and instead of paying £300 a year to an insurer, pay £25 a month into a high-interest savings account or into an interest-paying current account.

Should you need any minor treatment or consultations not available on the NHS, or you want a faster service, simply dip into your own insurance fund. Stay fit and healthy and you get to keep your 'premiums' with the interest on top.

However, remember that treatment for some conditions, such as cancer, can cost hundreds of thousands for private healthcare so in some situations it could be worth paying for private health insurance, if your policy covers the illness.

Most insurers won't cover for a pre-existing condition but always check

Health insurance isn’t designed to cover you for every health issue that might occur. It covers treatment for acute conditions that start after your policy begins, such as cataract surgery – and you may still need treatment via the NHS in some cases.

Some insurers may provide cover for longer-term (chronic) conditions, but you’ll need to check the policy to see what you’re covered for.

The price of health insurance isn't fixed so you'll pay more as you get older

Health insurance premiums aren't set at the price you paid when you first took them out so the price will rise over time and usually on an annual basis.

Even though there's competition in the health insurance market, whatever policy you choose, your premiums are likely to rise each year above the rate of general inflation. As methods for diagnosing conditions become more advanced, the costs of these developments are often passed on to policyholders.

In addition, as you get older, you're more likely to need treatment and premiums increase to reflect this. For example, a 70-year-old is likely to pay three times more for cover than a 35-year-old.

On top of this remember that most health policies won't accept you if you have pre-existing conditions so to remain covered for a condition you have, it may be better to stick with your current insurer.

Paying a year upfront or monthly by direct debit may slash the cost

Many insurers will give you discounts if you pay in certain ways such as if you pay by monthly direct debit or an annual payment.

For example, AXA PPP will give you 5-10% off and Saga* will give you a 7.5% discount if you pay for the whole year upfront.

Only go for a policy if it works for you, no matter how good the discount is – if the cover isn't right there's no point buying it.

If you can show your insurer you have a healthy lifestyle it may slash your premium

Some insurers will charge you less if you can prove you can stay in good health with regular exercise and healthy eating.

With Aviva’s Healthier Solutions, for example, you can save up to 15% if you renew and remain in shape. When you sign up you'll be asked to fill in a health questionnaire and from this given a score on your overall fitness. If you can improve on this, you'll be able to get the renewal discount.

Vitality Health (previously called PruHealth) has a similar plan and offers cashback (up to 15% of the premium) if you can show you're leading a healthy lifestyle. However, be aware that you might save more by switching providers).

Perks such as cheap gym cover and cinema tickets can be great but they're not the reason to buy

There are also other perks on offer such as discounted gym membership which can be a winner as not only could your monthly gym fees go down, by 50% withVitality Health for example, you'll also have the benefit of the health insurance policy which you pay for.

It's not just gym discounts either, the Vitality Health scheme also offers free weekly cinema tickets to those signed up to its health insurance plan. However, as with all of these sweeteners, never choose a product based on the freebies and get the coverage you need for the price you can afford.

Paying an excess will lower the monthly cost – but only go for it if you can afford it

Not to be confused with living the high life during the festive period or a long afternoon at the local all-you-can-eat buffet, an excess – in the insurance sense – is the amount you pay towards any claims you make.

For example, if your excess is £100 and you get a bill of £300 – you'll pay the first £100 and the insurer will stump up the rest. The larger the excess the cheaper the premium. But be careful when picking one as you need to make sure you can afford to pay it.

Insurer WPA, for example, offers a ‘shared responsibility’ plan where customers, who choose the Premier or Elite plan, pay up to 30% of any claim up to an agreed limit. If you choose the shared responsibility option, a discount is applied to cut the premium and be as much as 50% off.

The insurer CS Healthcare runs a similar scheme and customers pay 15% of each claim per year, up to a maximum of £1,000 or £3,000 per person, per year, after which the insurer will pay 100% of each claim.

If you go for this option make sure you have enough money set aside in a high-interest savings or current account to pay for any claims you'll need to make.

With a pick n' mix policy you only pay for what you need

Not the multi-coloured sweets, we're talking about pick and mix in the insurance sense, where you can create your own policy to fit your needs and budget.

Many providers sell cheap, basic plans where you can add-on extras such as extra cancer care or outpatient treatment.

For example, with the premier policy fromWPA, you can add up to £500,000 emergency cover abroad for £1.27 per month.

You can also cut the cost by restricting when you use the policy. Several insurers will lower your premium costs if you choose what's called a 'six-week option'. This means if the waiting time with the NHS is six weeks or under, you'll be treated with the NHS. If it's more you'll be eligible for private healthcare via your health insurance policy.