Are You Buying Private Medical Insurance? - ABI

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Are You Buying PrivateMedical Insurance?Take a look at this guide beforeyou decide2012

ARE YOU BUYING PRIVATE MEDICAL INSURANCE? 3Contents1. About this guide42. Understanding what you are buying43. What is private medical insurance?64. How do I buy private medical insurance?75. Will I need to give details about my health?86. How do I choose the right cover?97. What is and is not covered?118. What if I have a disability?129. Will my premiums (payments) increase over time?1210. What if I want to change to a new insurer?1311. What do I need to remember?1412. What protection do I have?15

4ARE YOU BUYING PRIVATE MEDICAL INSURANCE?1. About this guideThis guide is for individuals who arethinking about buying private medicalinsurance (PMI). If you get PMI as abenefit through your employer, youremployer will have all the informationabout your insurance cover whichmay be different from the generalinformation detailed in this guide forindividuals purchasing PMI, for examplethe cooling-off period will not applyif your employer has purchased theinsurance for you.We have designed this guide to helpyou understand more about what PMIin the UK is, why people buy it, and how itworks, so that you will be able to make aninformed choice before you buy a policy.We publish this guide on behalf of allinsurers who offer PMI, whether theyare our members or not. The ABI is therecognised trade association that representsinsurance companies working in the UK.Our members account for some 90% ofpremiums in the UK.As well as this guide, the information youreceive from PMI companies will tell youmore about the products that you areconsidering buying. They outline whatis, and is not, covered. Remember thatproducts from different companies will vary.If you have any questions, your financialadviser or insurance company will be ableto answer them.2. Understanding what you are buyingBuying private medical insurance issimilar to buying any other type ofinsurance policy.Private medical insurance is available in arange of different cover levels at differentpremium levels designed to meet theneeds of different customers. For example,you can have choices around the types oftreatment covered, what cover level willapply to those treatments, where treatmentis provided, and the contribution you mightbe willing to make to the treatment cost(the excess). Take the time to understandthe cover available to you to help you makean informed choice.

ARE YOU BUYING PRIVATE MEDICAL INSURANCE? 5You should: compare the benefits ofeach insurer; compare any cover limits ormonetary amounts; consider your own healthrequirements; and ask questions about howthe cover works.If your employer has purchasedthe cover on your behalf, theywill have made these decisionsfor you.To make sure that you understand whatyou are covered for and the limits that willapply if you make a claim, read the policyterms and conditions. You should contactthe insurer who will be happy to talk youthrough the cover available to you.your insurance cover ends. Your insurer willcontact you as you approach the end ofcover about the options available to you soyou can discuss it with your specialist.For example, you might want to know: Return to the NHS and receive thetreatment there, if available Return to the NHS and receive alternativetreatment Pay for the treatment privately on aself-pay basis. Are there monetary limits on thepolicy – how much of the cost of atreatment, or course of treatments,do you want covered? How does an excess work – will it beapplied per claim or per policy year? What cover is there for cancer – whattreatments are covered and for whichstages of the disease? Is there a no claims discount – whatwill happen to my next premium if Imake a claim?There can be limits on cover fordrug treatments. You might want toask about these. A drug treatmentthat your insurer has covered mightnot be available on the NHS whenThese could be:Don’t confuse private medical insurancewith other types of insurancePrivate medical insurance is often called‘health insurance’, and can sometimes beconfused with other types of insurancesuch as health cash plans, incomeprotection and critical illness. We publishguides on these types of insurance if you’dlike to know more.

6ARE YOU BUYING PRIVATE MEDICAL INSURANCE?3. What is private medical insurance?Private medical insurance is designedto cover the cost of private medicaltreatment for ‘acute conditions’ thatstart after your policy begins.An acute condition is a disease, illness orinjury that is likely to respond quickly totreatment that aims to return you to thestate of health you were in immediatelybefore suffering the disease, illness or injury,or which leads to your full recovery. Yourinsurer can tell you about their cover forthis and whether or not they will provideany cover for longer-term conditions(typically referred to as chronic conditions).A chronic condition is a disease, illness,or injury that has one or more of thefollowing characteristics: it needs long-termmonitoring, control or relief of symptoms,it requires rehabilitation, it continuesindefinitely, and it has no known cure or islikely to come back.PMI is designed to work alongside not toreplace all the services offered by the NHSand in all cases customers retain their rightto use the NHS. Some policies may covercertain types of, or elements of, long-termtreatment or treatment for chronicconditions, but this is not usually the mainpurpose of PMI.Why buy private medical insurance?People buy this type of insurance to have:Timely access to healthcare Prompt referral to a consultant Quick admission to hospital Treatment at a convenient timeChoice of healthcare Direct care by a consultant Advanced treatment optionsHigh-quality private clinic andhospital accommodation Privacy of an en-suite room Home amenities such as TV Comfort and cleanlinessIn addition, PMI can pay you a cash benefitwhen you choose to use the NHS instead ofhaving private treatment.

ARE YOU BUYING PRIVATE MEDICAL INSURANCE? 7How does private medical insurance work?Although policies can be different, medicaltreatment usually has to start with a referralby your GP for specialist treatment. Beforeyou arrange any private treatment, youshould call your insurance company to checkthat you are covered for the treatment.Stay in touch with your insurer at each stageof your treatment. Your insurer will confirmif you are covered. It is likely that treatmentsfor some illnesses, including pre-existingconditions (conditions from which you arealready suffering, or have already had beforeyour policy started) will not be covered by aprivate medical insurance policy (see section5 of this guide).4. How do I buy private medical insurance?Private medical insurance is providedonly by insurers and may be bought:you advice on which of their own policiesbest suits you. direct from the insurer; through an independent adviser; or through an agent (bank, building societyor retail outlet, such as a supermarket)Your adviser must explain whether they are:You can apply for insurance:If you buy direct from an insurer or insurer’sagent without receiving advice, it is yourresponsibility to choose a policy that isright for you. over the phone; using the internet; or face-to-face; by post.The method of application may vary byinsurer. If you’re using the internet, trysearching under ‘health insurance’ as well as‘medical insurance’.An insurer, or a tied agent who sellspolicies on an insurer’s behalf, is only ableto discuss that insurer’s own policies. Anindependent adviser offers policies from arange of insurers.Independent advisers give yourecommendations after assessing yourneeds. They are responsible to you for theadvice they give. If you buy direct from aninsurer or an insurer’s agent they will alsoassess your needs. But, they can only give independent; advising on a range of insurers; or a representative of one insurer.You will be asked to fill in an application,and may be asked for information aboutyour health. Your application, or anydeclaration you make to your insurer, isvery important. In fact, it forms the basis ofyour contract with your insurer. You mustanswer any questions you are asked as fullyand as accurately as you can, to the bestof your knowledge and belief. If you don’t,your insurer may refuse to pay your claimand could cancel your policy. If you areunsure whether something is important,you should disclose it.Once your application has been acceptedyou will be told when cover will start.

8ARE YOU BUYING PRIVATE MEDICAL INSURANCE?Cancellation periodYour insurer will send you policy documentswhen your policy has been set up. You haveat least 14 days from the day you receivethem to decide whether the product issuitable for you. This is commonly known asa ‘cooling-off period’. If you want to cancelyour policy, you must do so within thestated period and tell the insurer that youwant to cancel your cover. If you have madeany payments you will usually receive a fullrefund unless you have made a claim.5. Will I need to give details about my health?You won’t normally be covered for anyillnesses you are currently sufferingfrom, or have already had. These areknown as ‘pre-existing conditions’. Youmust answer all questions as fully andas accurately as you can, to the best ofyour knowledge and belief.There are two main methods thatPMI companies use to deal with yourapplication for cover. These are: full medical underwriting; or moratorium underwriting.All PMI companies will offer you the fullmedical underwriting option. Only somecompanies offer the moratorium option.Full medical underwriting(medical history declaration)You are asked to give details of yourmedical history. The insurer may write toyour doctor for more information, but theydo not do so in every case. You must giveall the information you are asked for. If youdon’t, your insurer may refuse to pay anyclaim that you make in the future, or maycancel your policy.If you are not sure whether to mentionsomething, it is best to do so. If you havea medical condition that is likely to comeback, the insurer will issue a policy, butthat condition (and any related to it)might not be covered. This condition maynever be covered, or not covered for a setperiod of time.Moratorium underwritingYou are not asked to give details of yourmedical history. Instead, the insurer doesnot cover treatment for any medicalcondition that you have received treatmentfor, taken medication for, asked advice onor had symptoms of. In other words, youwill not be covered for any condition thatexisted in the past few years. Five years isthe usual time period.

ARE YOU BUYING PRIVATE MEDICAL INSURANCE? 9These conditions may automaticallybecome eligible for cover. But this will onlyhappen when you do not have symptomsof, or receive treatment, medication, testsand advice (from your GP, a healthcareprofessional or a specialist) for thatcondition, or a related condition, usually fora continuous period of two years after yourpolicy has started.You do not need to tell the insurer aboutyour medical history when you take out thepolicy. If you claim, however, your insurermight ask for medical notes that are neededto decide if your claim can be covered.There are some conditions, for examplechronic conditions, that will probably neverbe covered. This is because you will alwaysneed treatment, medication, tests or advicefor them. You should not delay gettingmedical advice or treatment, simply to getcover under the moratorium terms.Your insurer will give you informationexplaining how their moratorium works. Youmay also want to ask the insurer or adviser,to explain this.6. How do I choose the right cover?You should check to see if you alreadyhave PMI cover. Some employers includePMI as part of their benefits package.Even a club or professional organisationmight have arrangements to offer you(and your family members) cover. Do you want a choice of hospitals, orwould you be happy to have any treatmentthat you might need, in a hospital availablefrom a limited range chosen by yourinsurance company? What are you not covered for?If this is not the case and you want to takeout cover yourself, you need to think aboutwhat benefits are most important to you.You will need to decide what sort of coveryou want. There are a number of things youwill have to consider:The answers you give to questionssuch as these could have a significanteffect on how much you pay (seesection 9). The more your cover includes,the higher your premiums are likely to be.There are different sorts of policies, fromlow cost, offering limited cover, to thosethat offer wide-ranging cover and benefits.Most policies offer cover for inpatient andday patient treatment, but not alwaysoutpatient treatment and diagnostic tests. How much do you want to spend? Are you prepared to pay for part ofyour treatment? Do you want your cover to include seeinga specialist and having diagnostic tests(for example, X-rays and blood tests) asan outpatient?

10 ARE YOU BUYING PRIVATE MEDICAL INSURANCE?The following diagram is an example of how you might get private treatment.Visit your GPYour GP needs to refer you forinvestigations or treatment.GP refers you forspecialist treatmentOutpatienttreatmentCall your insurancecompany to checkthat you are coveredfor the treatment,specialist andhospital.Inpatient orDay patienttreatmentStart to ClaimThis usually includes initial consultationsand diagnostic tests.Your specialist needs to refer you to hospitalfor more investigations or treatment.HospitalThis may be a private hospital or privatefacilities within an NHS hospital.After leaving hospital you will usuallyhave a follow-up visit to your specialist.Follow-up visitSpecialist consultation and a review ofyour treatment.How youreceivetreatmentfalls intoone of threecategories.OutpatientA patient who attendsa hospital, consultingroom, or outpatientclinic and is notadmitted as a daypatient or inpatient.OutpatienttreatmentDay patientA patient who isadmitted to a hospitalor day patient unitbecause they need aperiod of medicallysupervised recoverybut does not stay in abed overnight.If your policyincludes outpatienttreatment and yourclaim is eligible, youcan claim after yourGP has referred youto a specialist. Stayin touch with yourinsurer at each stageof your treatment.InpatientA patient whois admitted tohospital andwho stays in abed overnightor longer, formedical reasons.

ARE YOU BUYING PRIVATE MEDICAL INSURANCE? 117. What is and is not covered?Remember, private medical insurance isdesigned to cover treatment for curable,short-term illness or injury. These arecommonly called ‘acute conditions’.Some illnesses and treatments arerarely covered.Private medical insurance isn’t designed tocover the long-term treatment of chronicconditions for a number of reasons. The private-hospital sector’s mainpurpose is to treat conditions that canbe cured, or mostly cured, quickly. A large part of the NHS’s funding is to carefor patients with long-term conditions.So, for example, patients with diabetes cango to clinics, be regularly monitored andhave their insulin needs met. This will oftenhappen locally, in a primary-care settingsuch as their GP surgery.As well as the practical reasons mentionedabove, insurers also have to balance howmuch cover they provide with what you arewilling to pay for that cover. So, insurersdo not usually cover the treatment oflong-term (chronic) conditions. This isbecause their premiums would become tooexpensive for most people.What your PMI might coverUsuallyincludedInpatienttestsSurgery as aninpatient orday herapy, for example, physiotherapyconsultationsand complementary therapyand treatmentwith a specialist(as part of thepolicy or if youask for it)The following conditions or treatmentsare normally not included in your cover. Going to a general practitioner (GP) Going to Accident and Emergency Drug abuse HIV/AIDS Normal pregnancyHospitalCash payment toaccommodation the customer forand nursing care treatment receivedas an NHS inpatient Gender reassignment (sex change) Mobility aids, such as wheelchairs Organ transplant Injuries you get from dangerous hobbies(often called hazardous pursuits) Conditions you had before taking outthe insurance (commonly known aspre-existing conditions – see section 5)

12 ARE YOU BUYING PRIVATE MEDICAL INSURANCE? Long-term treatment and chronicconditions Dental services Prescription drugs and dressings, afterleaving hospital or as an outpatient Deliberately self-inflicted injuries Infertility Cosmetic treatment Experimental or unproven treatmentor drugs Kidney dialysis War risksYour insurer will give you the terms andconditions of your policy at the point of saleor as soon as possible thereafter, but in anyevent before the conclusion of the contract.Your insurer may also give you a summaryor Key Facts document either before orstraight after your insurance contract starts.The summary of your policy or Key Factsdocument is designed to highlight anyimportant or unusual limits of the policy,as well as the main monetary limits. Pleaseread your full policy document as thesummary or Key Facts will not explain thefull policy terms and conditions.8. What if I have a disability?You will not be refused cover becauseyou have a disability. As with otherpre-existing conditions, your insurermight not include cover for treatmentthat is needed because of your disability.However, the law requires that it must bereasonable and fair for them to do this.If you sign a declaration about yourmedical history, you must give all relevantinformation about your disability. Ifyour policy does not cover pre-existingconditions, an existing medical conditioncausing disability, or arising from it, will notbe covered.9. Will my premiums (payments) increase over time?Even with the wide range of PMI policiesavailable, it is likely that whatever policyyou choose your premiums will riseabove the rate of general inflation.The cost of healthcare will increase for anumber of reasons: As methods used to diagnose conditionsbecome more advanced and are usedmore, doctors are able to identify someconditions earlier and patients can betreated more quickly; and As new drugs, such as those for thetreatment of cancer, become available; and As the technology used in surgerybecomes more advanced.PMI usually extends to cover new medicaldevelopments, as they become establishedmedical practice. As you get older you aremore likely to need treatment. Premiumsusually increase with your age to reflectthis. The graph below shows how premiumscan increase with age. This is only anexample and will vary depending on yourinsurer. You can always ask your insurer togive you advice.

ARE YOU BUYING PRIVATE MEDICAL INSURANCE? 13Indexedprice350300250200Comparative price by ageThe indexed price is how much the price increases whencompared to the price at age 35. So, the indexed price atage 35 is 100. When you are aged 70 it is around threetimes the price for someone aged 35.150100500354045505560657075AgeCan I reduce my premiums?You may be able to reduce your premiums bychoosing from: a reduced level of benefits, such as limitedoutpatient cover; a specific range of hospitals; an excess on your policy, where you paythe first part, say 100, 200 or 500 ofany treatment, either each policy yearor each claim; a policy with ‘co-insurance’ where youagree to pay a set percentage of any claimand the insurer pays the balance until youhave paid an agreed yearly amount (afterthis the insurer pays 100%); a policy that offers a no-claims discountor a discount that depends on yourcommitment to health, includingexercising regularly and not smoking; having treatment on the NHS, if this isavailable within a certain time, rather thanin a private hospital; and receiving a discount by changing howyou pay.10. What if I want to change to a new insurer?You can change your PMI company. Ifyou want to switch, there are four mainthings you need to consider.Comparing your coverEven if your personal medical exclusions staythe same with your new insurer, the overallcover is likely to be different.You should: compare the benefits of each insurer; compare any cover limits or monetaryamounts; and ask questions about how the cover works.

14 ARE YOU BUYING PRIVATE MEDICAL INSURANCE?PaperworkPre-existing conditionsPaperwork varies from one companyto another, but there’s likely to be anapplication form to sign and you mightneed to provide a copy of the policycertificate from your current insurer asproof of your current cover.Some insurers will keep your currentpersonal exclusions (what is not included inyour cover) which means any treatment forthese conditions will be excluded from yournew cover. They will not add any new ones.However, some insurers might not coverillnesses or injuries you have had in therecent past or any condition that you sufferfrom now, even if these are covered by yourcurrent insurer.When you choose to switchUsually, private medical insurance is offeredthrough an annual contract. If you arethinking of switching to another insurer, it’sbest to consider doing this at your renewaldate. At any other time check if you willlose any payments.11. What do I need to remember? Before you change insurers youshould check the benefits, policyterms and underwriting positioncarefully to understand theconsequences. The cover offeredmay not be the same. Check that you have the coverthat you think is important –remember you may well have achoice of options. You must give full and accurateinformation to your insurer oradviser. This will avoid yourclaim being refused or yourpolicy being cancelled. You should read all the policydocuments carefully, now and in thefuture. Keep all documents safe. You need to keep your paymentsup to date. If you don’t your coverwill stop and only eligibletreatment costs from before thecancellation date will be paid. You will be sent details of changesto benefits, rules or premiumsbefore your renewal date. Yourpolicy will not be cancelled justbecause you have claimed or yourhealth has got worse.

ARE YOU BUYING PRIVATE MEDICAL INSURANCE? 1512. What protection do I have?RegulationConfidentialityOn 14 January 2005, the Financial ServicesAuthority (FSA) started regulating privatemedical insurance policies and anyadvice you receive about them. Theseresponsibilities are being taken over by thePrudential Regulatory Authority (PRA) andthe Financial Conduct Authority (FCA).By law, specifically the Data Protection Act1998, all insurers have to treat sensitive andpersonal information confidentially, especiallymedical details. When you are asked forinformation, you will be told what it willbe used for, who it may be given to and inwhat circumstances. You can ask to see anyinformation an insurer has about you.ComplaintsAll insurers and anyone else advising onprivate medical insurance, must have theirown complaints procedures in place. Theymust also be covered by the FinancialOmbudsman Service (FOS). This meansthat if you have a problem with any partof your cover, you should speak to yourinsurer or adviser first. If you are not happywith the way your complaint is handled,the FOS offers an independent service tohelp settle your dispute. This service is free.Website: www.financial-ombudsman.org.ukCompensationThe Financial Services CompensationScheme (FSCS) is the UK’s legal fund forcustomers of authorised financial servicesfirms. The FSCS can pay compensation if afirm cannot, or is likely to be unable, to payclaims against it due to insolvency. The FSCSis an independent organisation, set up underthe Financial Services and Markets Act 2000.Website: www.fscs.org.ukTotally anonymous statistical information issometimes given to outside organisations,so they can carry out research. Insurersmight use email to communicate with you.If you choose to communicate with yourinsurer in this way, you must make sureyour email address is private and cannot beused or seen by anyone else.

Association of British Insurers51 Gresham StreetLondon EC2V 7HQPhone: 020 7600 3333Fax: 020 7696 8999Email: info@abi.org.ukwww.abi.org.uk

Don't confuse private medical insurance Private medical insurance is often called 'health insurance', and can sometimes be confused with other types of insurance such as health cash plans, income protection and critical illness. We publish guides on these types of insurance if you'd like to know more. You should: compare the benefits of

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