Most UK residents are entitled to free healthcare from the NHS. But many people also take out private medical insurance, which covers the costs of being treated by private healthcare providers. Find out how taking out private health insurance works, when it might be suitable, the pros and cons, and a few things about before you do.

What does it do?

Private health insurance – also known as ‘private medical insurance’ –  pays some or all your medical bills if you’re treated privately. It gives you a choice in the level of care you get, and how and when it’s provided.

If you don’t want to use the NHS, it can be very expensive to use private treatment without it – especially for serious conditions.

What does it cover?

Like all insurance, the cover you get from private medical insurance depends on the policy you buy and who you buy it from. The more basic policies usually pick up the costs of most in-patient treatments – such as tests and surgery – and day-care surgery.

Some policies extend to out-patient treatments – such as specialists and consultants – and might pay you a small fixed amount for each night you spend in an NHS hospital.

What isn’t covered?

Your healthcare insurance won’t usually cover private treatment for:

• organ transplants
• pre-existing medical conditions
• normal pregnancy and childbirth costs
• cosmetic surgery to improve your appearance
• injuries relating to dangerous sports or arising from war or war-like hostilities
• chronic illnesses such as HIV/AIDs-related illnesses, diabetes, epilepsy, hypertension (high blood pressure) and related illnesses.

You might be able to choose a policy that covers mental health, depression and sports injuries, but these aren’t always covered.

How do I choose a private health insurance plan?

Private medical insurance can be offered to employees as part of company benefit plans.

Some employers set up the policy for you and pay all the premiums as part of their package. Others offer access to lower cost private medical insurance than you would be able to buy individually.

Do you need private health insurance?

It’s very much a personal choice. UK residents get free treatment on the NHS, so you only really need private medical insurance if:

• You would prefer not to wait for NHS treatment.
• You don’t want to use the NHS, and would prefer private hospitals where possible.
• You want to be covered for drugs and treatment you can’t get on the NHS, such as specialist surgery for sports-related injuries – check the treatment is included in your policy before you buy.

Who doesn’t need private health insurance cover?

You don’t need private medical insurance if:

• You’re happy to rely on the NHS for your care.
• You already have medical insurance through your employee benefits package.
• You’re worried about your child becoming sick – children get immediate priority on the NHS.
• You only have spare cash for basic insurance, such as car and home insurance – and life insurance if you have dependants.
• You have debts to repay and no savings – it’s best to put your money towards those, rather than private medical insurance.
• You can pay for individual treatments – if you have enough savings it might be more cost-effective to pay for any treatment you might need privately than to pay regular insurance premiums.

The pros and cons of private health insurance

Pros

• Specialist referrals. You can ask your GP to refer you to an expert or a specialist working privately to get a second opinion or specialist treatment.
• Get the scans you want. If the NHS delays a scan, or won’t let you have one, you can use your cover to pay for it.
• Reduce the waiting time. You can use your insurance to reduce the time you spend waiting for NHS treatment, if your wait time is more than six weeks.
• Choose your surgeon and hospital. You can (in theory) choose a surgeon and hospital to suit your time and place, which isn’t possible on the NHS.
• Get a private room. You’re more likely to get a private room, rather than stay in an open ward which might be mixed-sex.
• Specialist drugs and treatments might be available. Some aren’t available on the NHS because they’re too expensive or not approved by the National Institute for Health and Clinical Excellence in England and Wales (NICE) or the Scottish Medicines Consortium (SMC).
• Physiotherapy. You get quicker access to physiotherapy sessions if you have insurance than you likely would through NHS treatment.

Cons

• You might get better care on the NHS. If you have a serious illness such as cancer, heart disease or stroke, you’ll get priority NHS treatment. NHS hospitals can be as good as, or better than, private hospitals
• Private medical insurance is expensive – and the price will go up. A typical family premium (two adults in their 40s and two children under 10) can vary from £700 to £1,800 a year. Premiums will rise every year, and with age. So by the time you’re older, and more likely to need hospital treatment, you might not be able to afford it.
• Chronic illnesses aren’t usually covered. Most policies don’t cover chronic illnesses which are incurable, such as diabetes and some cancers.
• Pre-existing medical conditions aren’t usually covered. You might be able to add them to the policy, but this is likely to push the price up.
• There might not be any local treatment options. If you choose a policy with an approved list of consultants and hospitals, this might not include the expert consultant you want to see or a convenient location for treatment.

Five things to think about when buying private health insurance

1. Get advice

There’s a lot of choice in the market, and cover can vary significantly between different providers. So it’s worth speaking to a financial adviser or a broker to help you get what you need.

2. How can you reduce the cost of private health insurance?

There are several ways to trim the cost. For example, some policies offer discounted cover that only kicks in when the NHS can’t provide the treatment you want within a certain period of time. You might be able to reduce the price by removing elements – often called ‘modules’ – you don’t need.

3. Is it worth switching?

As with most insurance policies, it’s worth looking around for a better deal. But take care before making any decisions. Your risk level increases with age and you might have developed medical conditions since taking out your current policy. So it might be difficult to get the same cover elsewhere. 

4. Be honest about your medical history

When you make a claim, the insurer will check your medical history. If you didn’t answer truthfully or accurately in your application, or you didn’t disclose something, your claim might be rejected or your policy cancelled.

5. Read the small print

Make sure you know exactly what is and isn’t covered, whether there are limits on treatment costs or drug treatments used and check if there’s an excess option and a no-claims discount. If you see something you don’t understand, ask the insurer, an insurance broker or a financial adviser.