In the UK around 7 million people spend around £3 billion a year on medical insurance. One in seven policies are taken out by individuals with the balance being put in place by their employers. The problem is that Medical Insurance is complex and few policyholders take the time to really study the details of their cover. As a result, many misunderstand what will be covered. If you expect medical insurance to pay every health claim, you’re mistaken.

Medical Insurance is designed to provide protection for curable, short-term health problems and allow policyholders to jump the NHS queues to see consultants, be diagnosed, receive surgery or be treated. That sounds fine, but before you buy you need to appreciate the treatments and situations that fall outside the scope of the cover.

But first a word of warning. This article does not relate to any specific policy and the terms and conditions issued by individual insurers do vary. So please ensure you also check your policy documents. After reading this article, you’ll know what to look out for!

Sorry – it’s a chronic condition

If a condition can be cured and is not a long-term problem, your insurance company will classify it as acute and should meet the cost. If your problem is incurable or it’s a problem that, despite appropriate treatment, will be with you for a long time, then your insurance company will classify it as chronic - and no, you won’t be covered.

But deciding whether a condition is acute or chronic is fraught with problems. It’s rarely a black and white decision and this can lead to a major area of conflict between policyholder and insurer.

It’s clear that asthma and diabetes are chronic conditions as you’re almost certain to suffer from them for the rest of your life. So those categories of illness are not covered.

Problems arise when Doctors initially consider a patients’ condition to be curable, but the condition later deteriorates and the medical team changes its’ mind, it’s now become incurable. This can sometimes happen, especially in the treatment of certain types of cancer.

In these circumstances, the condition is initially defined as acute and is therefore insured, but deteriorates and becomes chronic - and outside the terms of cover. This is possible as insurers retain the right to reclassify a condition from acute to chronic during treatment.

Sorry - it’s too long term The insurance company will not pay out for long term treatment. But you need to check your policy documents to see how they define “long-term”. You can find the situation where a course of drugs extends for say 12 months, but the insurer will only pay for ten months.

Sorry – it’s preventative Your insurance is designed to pay for the treatment and cure of conditions when they arise. It is not designed to pay for treatments that are used to prevent an illness.

Again, the problem of definition arises. Sometimes it is arguable whether a treatment is preventative or a cure. Take the drug Herceptin for example. This drug can be used in the early stages of breast cancer. Research shows that Herceptin can halve the incidence of cancer returning for women who have a particularly virulent form of the cancer known as HER2. In this situation, is Herceptin offering a cure or is it a preventative?

Insurance companies are split on the debate. Norwich Union, WPA, BUPA and Standard Life Healthcare will pay for Herceptin for HER2 patients whereas Legal and General and Axa PPP will not.

Sorry – the drug is not approved Two of the main attractions for taking out medical insurance are: to jump the queues at the NHS, and to get the latest treatments and drugs. But there’s a rider.

The Institute for Health and Clinical Excellence exists to approve the use of new drugs by the NHS in England and Wales. Until that body has approved the drug your insurer is unlikely to pay for its use. The problem is that the Institute’s brief is to perform a cost/benefit analysis to ensure that the financial benefits to the nation from using the drug, outweigh the costs of using it in the NHS. A difficult brief and it has placed the Institute under scrutiny for the extended delays in drug approval.

The compromise hit on by the Financial Ombudsman is that if your medical policy won’t pay for the use of experimental treatments, then it should meet the cost of an approved conventional treatment with the policyholder footing the bill for the balance if the experimental treatment is more expensive.

Sorry – it’s a pre-existing condition

The basic principle is that if you are already suffering from a condition when you start a policy, then that condition “pre-exists” the policy and any claims for its treatment are invalid.

For this reason, insurance companies insist you complete an exhaustive questionnaire before they agree to insure you. After all they need a clear picture of your medical condition before they quote. For many applications, the insurer will, with your approval, also write to your GP for specific details of your medical history. They like to have a complete picture.

So lets say some years ago you twisted your knee playing tennis. It appeared to recover but now it turns out that you have a torn cruciate ligament and it needs to be operated on. Your medical insurance company could argue that the ligament damage was a pre-existing condition and you have to pay for the operation.

Some insurers try to accommodate these grey areas with a moratorium provision within your policy. These provisions typically say that so long as you have been symptom free for two years relating to any condition you’ve suffered from within the last 5 years, they will pay for subsequent treatment. Not all policies have these moratorium provisions and the time periods do vary between insurers. You should carefully read your policy.

Sorry – its not covered

Medical Insurance is an annual contract – just like your car insurance. So when it comes to renewal, your insurer is at liberty to review not only your premium but also change the conditions on which your cover is provided.

Therefore, if your policy comes up for renewal mid way through a course of treatment, it’s possible to find that your new policy no longer covers that particular treatment. This means that you will have to foot the bill for the balance of the treatment.

Furthermore, with ongoing advances in medical research, more and more conditions are becoming treatable. This progress has the effect of shifting back the dividing line between chronic and acute conditions.

This hits the insurers’ pocket in two ways. With more conditions being reclassified as acute, the number of claims is increasing. And there’s also a trend for new treatments to cost more – Herceptin being a good example. The net result is that the insurers are finding themselves having to pay out far more. This is inevitably passed back to you through increased renewal premiums. And in an attempt to reduce their risk exposure, insurers have a tendency to adjust their definitions and exclusions. This means that you must read your renewal notice closely before you decide to renew.

So if you’re tempted to buy Medical Insurance, be aware that everything is not always black and white. If you’ve got insurance and need treatment, you’re well advised to contact your insurer without delay and get them to confirm that they will meet the cost of your proposed treatment.

Private health insurance used to be something taken out by the rich and famous. Thankfully, the prices of health insurance have dropped to a more affordable level, meaning that all of us can enjoy the peace of mind that private health insurance offers, no matter what our budget.

Private health insurance goes by many names – private medical insurance (PMI), hospital plan, health plan, health insurance and cash plans and they are, in one form or another designed to assist with costs related to your health.

You can also get specific forms of private health insurance such as dental insurance.

Private health insurance should not be confused with permanent health insurance, which is something completely unrelated to medical costs and which pays out an income if you become permanently ill.

Here we take a look at the private medical insurance sector and discuss the different types of cover available.

Why do I need private health insurance?

With NHS waiting lists growing all the time and the patient having little choice over what hospital he is seen at and at what time of day, more and more people are opting for private health insurance.

This removes the long and often anxious wait for an appointment and means that, in most cases, you can choose which hospital you are seen at as well as having an appointment time, often within a few days.

It gives you the peace of mind knowing that you will be seen and treated quickly at the best hospitals should you ever become unwell.

What is the difference between private medical insurance (PMI) and cash plans?

A typical PMI policy pays for the cost of medical treatment. Subject to a limit on which hospitals can be used and, in some cases, the type of medical treatment required, a PMI policy will pay the costs of your treatments and your stay in hospital.

However, you can get different levels of cover, so the more you pay, the more benefits you will get such as a wider choice of hospitals; more types of medical treatment will be covered etc.

Following referral by your GP, the insurance will pay consultants’ invoices for investigations, operations and necessary treatment. Normally, 100% of costs are met. The knock on effect means that as almost everything is covered, PMI can work out more expensive than basic health insurance such as cash plans.

Hospital cash plans – or just cash plans – are lower costs alternatives to PMI. Designed to complement the services provided by the NHS, they cover the costs of every day healthcare, such as dental and optical bills.

Additional features of some of the plans are payments towards the cost of consultations and treatments such as physiotherapy, chiropractic treatment and even ‘alternative’ treatments such as acupuncture and reflexology.

Cash plans pay towards the costs of everyday treatments, so it is expected that you will make several claims a years – every time you visit the dentist, optician or physiotherapist for example.

Why are cash plans cheaper?

Individual cash plan claims are lower – they do not pay the cost of treating specific illnesses, rather, bills are reimbursed up to an agreed limit or there is a fixed daily amount if they are hospitalised – which makes cash plan premiums lower.

Can I have a PMI policy and a cash plan?

Yes, many people who subscribe to PMI themselves or have PMI provided by their employers, supplement their PMI cover with a cash plan. This means all their healthcare needs, whether it be a trip to the dentist, or major surgery, are met.

What is ‘self-pay’?

An alternative to both PMI and cash plans is self-pay. You pay the bill for an operation as and when you need it, so there are no monthly premiums over many years. However, you should consider this option carefully - what would happen if you had the bad luck to be struck by a very serious illness? Could you afford the cost?

I’ve heard about a health insurance plan that offers you cheaper premiums the healthier the lifestyle you lead – is this right?

Yes! A new policy in the PMI market place calculates your premiums based on how healthy you are, so it is an incentive to keep healthy! This particular health insurer recognises and rewards healthy living so not only can you make significant savings on your premiums by walking the dog that bit more often or making sure that you have your five fruit and veg a day, but they help you to stay healthy through discounts with their health and wellbeing partners.

What other plans are there? There are many new types of cash plans coming onto the market that deal with specific treatments or situations such as dental insurance.

What does dental insurance cover?

There are a small number of providers of dental insurance on and individual as well as a family basis and typically the plans offer cover for costs associated with maintenance (such as regular check-ups, x-rays and hygienist visits), emergency care and for if your teeth are damaged in an accident, and treatments (eg fillings, bridges and crowns).

Plus, some offer a lump sum payment should you be diagnosed with oral cancer as well as extended worldwide cover.

The origin of private medical insurance goes back a long way – before the NHS was formed. In pre-NHS days, people contributed to “friendly societies”, which provided financial assistance to people in times of need. Some private medical insurance providers, such as BUPA, remain non-profit-distributing bodies, though there are also many commercial insurance companies providing private medical insurance these days. One of the best-known names in private medical insurance cover is AXA PPP healthcare – which was actually conceived in 1938 to provide a health insurance scheme for middle income earners in London.

The principal aim of private medical insurance is designed to cover treatment of “acute illness” – defined by Which? As “conditions which can be cured or substantially alleviated by treatment.” Treatment of chronic illnesses, such as multiple sclerosis or arthritis, may not be covered by private medical; so critical illness insurance might be more suitable. Critical insurance cover will be based on your individual requirements – so shop around for the right policy and always be completely open with your insurance provider, or you may invalidate a claim at a later date.

Other treatments generally excluded from private medical insurance include cosmetic surgery, treatment for alcohol or drug abuse and infertility treatment. The majority of standard policies exclude private consultations of a GP, routine check-ups and dental work – unless it is undertaken in a hospital. However, always check your private medical insurance policy – as some will be more comprehensive than others.

Private medical insurance can be an effective way of ensuring swift access to medical care for your family. Just remember that insurance policies reflect your exact circumstances – so don’t assume that one size fits all.

For additional information on private medical insurance and critical illness insurance:

“Be your own financial advisor”, Which? Consumer Guides, author Jonquil Lowe

Approximately seven million of us have health insurance in the UK, for the most part it’s provided by employers as a benefit. Consequently, most people take health insurance for granted and don’t really look at the policy documents. That means that they don’t really know what’s covered, and what’s not. If you think that health insurance will cover all your health costs, you’re unfortunately wrong.

Health insurance is very particular in its purpose – and is fine for curable, short-term health problems, and for allowing policyholders to bypass the NHS queues and get straight through to the consultants to receive quality care in a much faster time. However, there are many other treatments and situations which do not fall within the scope of the policy.

Before you read on, we should advise you that every policy is different and you really need to read your own documents to get the full picture. However, this article will give you some very good pointers on what to look out for.

Chronic conditions

If you fall ill and it turns out that the illness can be cured in the short-term, it’s called ‘acute’ and you’re covered. If, however, your problem is incurable or, even with treatment, it will last for a long time, then it will be classed as ‘chronic’ and your policy will not cover you.

It’s the line between ‘acute’ and ‘chronic’ that causes conflict between insurer and policyholders. Diabetes and asthma for example are chronic – they are not curable and they stay with you for the rest of your life. Some types of cancer cannot be so easily classified. The doctors may decide that the cancer is curable, but then the illness could worsen and the diagnosis could be changed to incurable. This means that while the illness is considered curable, then you can make the most of your cover, but if the diagnosis changes to incurable, your cover will be lost. Insurance companies reserve the right to reclassify an illness from acute to chronic during treatment.

Long-term treatment

Long-term treatment is a definite no-no. But check your policy documents first to see their definition of “long-term”. It may be that the insurer will pay for 10 months, so if it’s a 12 month treatment, you will need to pay for the final 2 months yourself.

Preventative medicine

Health insurance covers the treatment and cure of conditions, it cannot be used to pay for preventative treatment.

What counts as being preventative is another grey area. For example, the drug Herceptin is used in the early stages of breast cancer, and research shows that Herceptin can reduce the chance of the cancer returning by 50% for women who have an aggressive form of the cancer called ‘HER2′. Some insurance companies call it preventative, some call it treatment:

Norwich Union, WPA, BUPA and Standard Life Healthcare will pay