Health Insurance. Private Medical Insurance 

Health insurance or ‘going private’ is an insurance policy designed to cover the cost of healthcare. In the UK we are lucky enough to have the NHS to provide free care for everyone, however as it is for everyone, we have to share. This can result in living in discomfort while waiting for an operation.  

Health insurance is designed to cover the cost of private medical treatment, for what are commonly known as ‘acute conditions.’  

Most insurance companies define an acute condition as a disease, illness or injury that is likely to respond quickly to treatment and aims to return you to the state of health you were in immediately before suffering the disease, illness or injury, or which leads to your full recovery.

Proadvice can advise you about the insurance companies cover for this and other conditions, such as cancer and chronic (long-term) conditions.

Cover can be purchased on a full medical underwriting basis, which means you will be asked a number of questions in realtion to your health. In many cases pre-existing medical condtions may not be covered. 

What is Private Medical Insurance?

Private Medical Insurance is a policy that you can take out to cover the cost of private medical treatment. The Private Medical Insurance plans main aim is to give you options, for example;

  • Where you are treated
  • Who treats you? You get to choose from the best doctors available
  • Give you access to drugs or treatment that are not always available on the NHS

Private medical insurance or ‘going private’ is an insurance policy designed to cover the cost of healthcare. Private Medical Insurance is also referred to as health insurance.  

We are unable to provide you with advice on private medical insurance, however we can introduce you to a specialist.

What is the difference between Income Protection and Permanent Health Insurance?

Permanent Health Insurance (PHI) is a long term sickness plan that provides you with an income should the worst happen to you and you are unable to work long term. Income protection is a general term used for several products which offer long term sick, short term sick and even unemployment cover. There are plans called Income Protection which is the same as a Permanent Health Insurance plan just with a different name. The name of a plan will often vary from company to company.

How do you claim on Permanent Health Insurance?

To be able to claim on a permanent health insurance plan you have to be considered ill enough to match the definition specified in your definitions issued by your insurance provider. The common definitions included on an income protection policy are;

  • Own Occupation - the policy will pay out if you are unable to do your own job
  • Suited Occupation – the policy will pay out if you are unable to do a job of similar skills and experiences
  • Works Tasks – the policy will pay out if you cannot perform a certain number of activities from a specified list

If your insurance protection claim is successful then the insurance company will pay you on average 50% of your gross salary, (many insurance companies offer more than 50% but 50% is the most common). 

For example, if you earn £20,000 you would be entitled to £10,000 a year or £833.00 per month, tax free, from your insurance provider. Your income protection plan will not interfere with any state benefits you may be entitled to. The income protection pay-out will normally work out to be 75% of your actual take home pay. If your job income fluctuates, for example, you work in a sales role so your pay is dependent on commission, you can opt to fix your income for the term of the plan. By providing proof of your income initially, if your income reduces in the future, at point of your claim the insurance company will take into account what you were previously earning.

With an income protection plan you are able to choose how soon the money is paid out to you in the event of a claim. This is referred to in the insurance industry as the ‘deferred period.’ The deferred period is a set period of time that has been agreed by prior arrangement where you will wait from the first day of your claim to when the plan actually pays out your first benefit. Even though you are covered straight away you will have to wait for this agreed period of time before the money hits your bank account. You will choose your deferred period from 0 days, 1 week, 30 days, 13 weeks, 6 months and 1 or 2 years. The longer deferred period you select the cheaper your plan will be but you will need to ensure that you have the provisions in place to cover you for this period of time. If you are self-employed you may want a relatively short deferred period or if you have a sick pay plan with your work you may decide to postpone your income protections first payment until your sickness cover with your work expires and then arrange for your income protection plan to commence, ensuring there is never a period where you are not receiving an income.

With an income protection plan, many people will select to take their plan out up to retirement yet you may decide you only need sick pay until your mortgage has been cleared or until your children leave home. The shorter the term of your plan, the cheaper your premiums will be. Another way to reduce your premiums would be to limit your benefit payment as by selecting a one or two year plan for your income protection policy, the plan can still be in place until retirement however only ever paying out for a term of one or two years per claim.

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