Health insurance explained
To help you decide if health insurance is right for you, we've compiled a short guide that explains what it is and how it works.
What is health insurance?
Health insurance is designed to cover the cost of private medical treatment for illnesses or injuries that are curable and short term (also known as ‘acute conditions’). Although a health insurance policy won't make such events any less stressful or upsetting, it can provide valuable peace of mind that specialist treatment will be available promptly, often at a hospital of your choice.
Remember! Health insurance is not designed to replace all NHS services as some services are outside the scope of private hospitals e.g. Accident and Emergency and GP services.
What’s the difference between ‘health insurance’ and ‘private medical insurance’?
There’s no difference other than in the name. Private medical insurance is also commonly referred to by its abbreviated form – PMI.
What does health insurance cover?
There are a wide variety of health insurance policies available, ranging from budget policies offering a limited range of benefits to higher priced policies offering much more extensive cover. Depending on the individual policy cover may be available for:
Out-patient treatments
Diagnosis, investigations, consultations or treatments that do not require the patient to be hospitalised overnight. Out-patient treatment usually includes consultation with specialist, diagnostic tests, radiotherapy / chemotherapy, physiotherapy and psychiatry.
Day-patient treatments
Day-patient treatments often require the patient to attend a hospital or clinic on a regular basis or for a period that lasts at least half a day without requiring them to be hospitalised.
In-patient treatments
In-patient treatment requires the patient to be hospitalised for one or more nights. In-patient treatment usually includes hospital charges, specialist / consultant fees, diagnostic tests, psychiatry and physiotherapy.
As a private patient you will usually have the privacy of an en-suite room along with other comforts, such as a television and telephone.
Remember! Some insurers do not make a distinction between out-patient and day-patient treatment, instead preferring to split the type of treatment into in-patient and out-patient treatments only. Cover can vary significantly between providers, so it's important to check exactly what level of cover you are getting from a policy before you buy.
What isn’t covered by a health insurance policy?
Health insurance usually does not provide cover for:
- Chronic conditions i.e. those that cannot be cured
- GP services
- Accident and emergency admissions.
- Pre-existing conditions i.e. a health condition or medical problem that was diagnosed or treated before the insurance policy was taken out.
What are exclusions?
An exclusion is a circumstance of event – such as a particular condition or treatment – that can prevent or invalidate a claim e.g. drug abuse, self-inflicted injuries, infertility, cosmetic surgery, preventative treatment, mobility aids, etc.
Remember! Always check the policy documents for a full list of policy exclusions.
What is an excess?
An excess is the contribution you agree to pay towards any claim. The excess is split into two different types, compulsory excess and voluntary excess.
Compulsory excess
This is the amount your insurance company requires that you pay towards any claim made on your policy. Normally it is deducted from the settlement made to you.
Voluntary excess
This is the amount you agree to pay towards the claim in addition to the compulsory excess. You agree this at the start of the policy; the higher the excess the lower your premium will be.
Depending on the insurance company, you may be able to opt for a no-excess policy. This means that you will not be required to contribute towards a claim, although the cost of the policy will increase as a result.
In the next part of our guide we look at arranging health insurance in more detail.
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Arranging health insurance »
