Comparing health insurance policies
Why you should compare health insurance policies
The last time we checked there were over 100 health insurance companies in the UK. Now let’s say each one of these has on average three different health insurance products they offer and in each product there on average about 6 options. That’s 4,687,500 different health insurance policies you could choose from. Imagine the difference in price and cover with that many different possibilities.
Arm yourself for battle - know your health insurance jargon
You will be in a much stronger position to choose the health insurance policy that is right for you if you understand the jargon. We always recommend speaking to a broker who will explain all the terminology to you but let’s go through the main jargon below.
The deductible is the amount of expenses that must be paid out of pocket by the insured before an insurer will pay any expenses. Only the amount which is in excess of the deductible is recoverable. For example if you have a health insurance policy where the deductible is £2000 and you’re overnight stay in the private hospital or small operation only costs £1000 you won’t get a penny out of the health insurance provider.
Health insurance excesses are very similar to car insurance excesses. If you set your policy excess at £300 you’ll have to pay £300 to the insurer when you make a claim. This may be per claim or once per year. A higher excess tends to lower the premium but we’ll cover this later.
A term in the insurance policy that excludes the insurer's liability in certain circumstances or for specified types of claims.
No claims discount (or bonus)
Again very similar to most other forms of insurance. A rebate of premium given to the insured person by an insurer when no claims have been made by the insured. This is normally anywhere from one to six years.
The failure by the insured or his broker to disclose a fact or circumstance to the underwriter/insurer. For example if the broker or insurer asks you if you’ve been treated for anything in the last year and you state you haven't, when in fact you’ve been treated for diabetes then they may not pay out any claim you make.
Period of risk
The period during which the insurer can incur liability under the terms of the policy.
Utmost good faith
Insurance contracts are contracts of utmost good faith, which means that both parties to the contract have a duty to disclose, clearly and accurately, all facts relating to the proposed insurance. Any breach of this duty by the proposer may entitle the insurer to repudiate liability, meaning they might not pay out on your insurance claim.
Full medical underwriting
Full medical underwriting requires you to complete a medical application to join the health insurance scheme of your choice, this includes declaring all past health conditions and treatment you’ve had or are currently suffering from or being treated for. Using this information the insurer will then make a decision based on your medical history what would and what would not be covered under the chosen insurance policy. You will know from the start whether a particular condition is covered or not, so it is very transparent.
With Moratorium underwriting you are not required to share any details about your past health conditions or treatments. Instead the insurer will exclude treatment for any conditions you have suffered from in the recent past, this is typically set at a 5 year period, and any conditions suffered during this period are defined as pre-existing. Some of the advantages of moratorium underwriting are.
It is relatively quick to set up a policy compared to full medical underwriting as no health information needs to be provided to the broker or insurer
If no health conditions have been suffered in the last 5 years there should be no automatic exclusions although please note cosmetic treatments and some others we’ll cover shortly are nearly always excluded
It potentially allows pre-existing conditions to be covered after the two year moratorium period but please discuss this with the broker or insurer
Hospital listMost health insurance policies will offer a choice of typically between two to five hospital lists. A hospital list is a selection of hospitals you can have your private medical treatment at and then make a claim for.
Six week optionThe six week option means should you require treatment and the NHS waiting list for that treatment is less than six weeks you would have to use the NHS to receive your treatment. However should the NHS waiting list for the treatment you require be greater than six weeks you would then be eligible to receive your treatment privately straight away and then make your claim. We’ll cover how this affects your policy premium shortly.
How to compare health insurance policies
Think careful about benefits you actually need
Think carefully about what it is you actually want from your health insurance policy before you begin. Here are some questions that you may need to give some consideration.
Do you want dental and optical cover?
From your current location would you travel to London to make use of the most expensive hospitals on the most expensive hospital list?
What is your current state of health and how likely is it that you will make a claim? Consider your excess and NCD protection options depending on the chances.
Do you feel you now know enough about health insurance to make an informed decision without the help of a health insurance broker about what product and options are right for you?
What is your current mental state, as strange as it may sound asking that 1 in 3 of us will suffer some form of mental illness in our life time and many people over looking their mental health options when deciding on a health insurance policy.
Know what your health insurance policy will and won't pay out for
We can't stress this enough, make sure you read the fine print and dont be afraid to put possible scenarios forward so you fully understand what will and won't be covered on your policy.
How to lower your health insurance premiums
A few quick tips on how to lower your policy premium.
This one is pretty obvious, like most forms of insurance the higher your excess is set at the lower your policy premium will be. Health insurance excesses tend to vary from around £100 to £1000.
Would you travel to London to make use of all those fancy hospitals? You may be paying for something you’ll never use.
Check for policy benefits you absolutely don’t need
Having dental and optical cover on your health insurance policy will push up the premium, does your company provide it so you can exclude it from your policy benefits?
If you think you might going to be traveling abroad and want your health insurance policy to cover you while you’re abroad check if you can add it midterm when you’re sure you’ll be needing it. Always check with your broker or insurer how midterm adjustments affect your cover.
Be honest but be smart
Again just like other forms of insurance both postcodes and occupations affect your premiums. Ask your insurer what constitutes being a resident and if you own multiple properties you might find you have more than one postcode to choose from. Always be honest though, if you mislead the insurer or broker in anyway they have to right to dispute your claim and may not pay out.
Dont be lazy
Just like most other forms of insurance health insurance providers rely on you being lazy each year and not switching to another insurance provider. First year they probably won't make much money from you, but the renewal years if you bother to check your policy documents you’ll probably see a jump in your premiums.
Consider using a broker
When buying health insurance you can go direct to the insurer or go through a health insurance broker. Here are some of the advantages of using a broker.
Using a broker cost less if they have preferential rates with the chosen insurer.
A broker can compare different health insurance products where as a health insurance provider can not comment on other policies by other providers. A broker really can give you free impartial advice.
By using a broker there is more room for haggling. The commision a broker will get for selling you a policy will typically be between 40% and 70%. If you ask them to do a commission sacrifice they may give you some of that commission in the form of a reduced policy premium.