For a lot of people in the UK, the idea of purchasing health insurance, instead of relying entirely on the National Health Service is a relatively new concept. In consequence it often poorly understood and newcomers sometimes end up with cover not relevant to their requirements or budget.
Below are five common mistakes people make when purchasing health insurance along with an explanation on how these can be avoided:
1. Not knowing what you specifically need to be covered for
First it is important to understand the basic difference between Health Insurance, Health Cash Plans, Income Protection and Critical Illness Cover:
Health Insurance provides the policy holder with access to private treatment when they need it, often in the hospital of their choice. It is designed to pay for the treatment of acute illnesses and injuries. These illnesses have a beginning, a middle and an end so respond well to treatment. Each insurer provides products with differing levels of cover their priorities.
Health Cash Plans are designed to provide a cash amount available to help as opposed to paying for the treatment itself. These can generally be added to Health Insurance though some providers will provide this option as a"stand alone" product.
Income Protection or Permanent Health Insurance is designed to pay a regular tax free monthly income if you are incapacitated and unable to work due to illness or injury. The amount of cover is based on a percentage of gross earnings and is suitable for both employed and self-employed people. There is no limit on the number of claims that can be made and if the policy holder was never able to work again it would pay until their selected retirement age (Max 65).
Critical Illness Insurance is designed to pay out a (tax-free) lump sum in the event of the policy holder suffering from certain types of serious illness or having to undergo certain types of surgery. It only pays out if the policy holder contracts one of a defined list of illnesses specified in their policy, so it is important to check the policy wording. So once you have decided it is definitely health insurance cover you need, you can now avoid the second biggest mistake...
2. Not knowing what is important to you
Is it being seen quickly, is it having access to private facilities, is it keeping the cost down, is it covering the whole family? What is it? For example, you might choose to be covered for all in-patient treatment but don't require out-patient cover. One way to work out importance is to write down 3 lists. The first could be the absolute essentials, the second the benefits you would ideally like including and the third would be the benefits you are not bothered about at all. That way, inclusion of the second list may come down to budget, but at least you will be covered for the essentials.
3. Not knowing the private hospitals in your area
There may be perfectly good Trust Care hospitals in your area which would be available for private treatment. If this is the case you could get significant discounts on your premiums with some companies by choosing to be treated at these hospitals instead of those specifically registered on the list as private hospitals. How important is it to use a hospital near home?
4. Not understanding the influence of excesses
Ideally we would never pay an excess when we come to claim and there are policies available where that is the case. And when it comes to relatively minor claims it is just as well! What would be the point of a course of physiotherapy costing 480 pounds, when the excess is 500 pounds? But if someone is only taking insurance to make sure the things they would find difficult to pay for such as heart bypass or hip replacement are covered. 500 pounds as an excess might not seem too bad, especially if it drastically reduced their monthly payments.
5. Not using a specialist health insurance adviser
The majority of good specialist advisers will not charge for their advice as they get paid commission by the insurance providers. They will review your individual needs and recommend the the best plan available. Make sure they explain what would and would not before you take out the policy rather than waiting until you come to make a claim!
Penny Oates finds the private medical insurance that best fits your budget and requirements. Further useful information on health insurance can be found at:=> http://www.clearlyhealth.co.uk.
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By Penny Oates
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