Private Medical Insurance

What it covers

This type of insurance pays your bills when you are treated by a medical specialist to whom you've been referred by your GP or dentist (but you don't need to be referred if you end up in hospital in an emergency). It includes hospital accommodation, nursing charges, surgeons' and anaesthetists' fees, X-rays, drugs, radiotherapy, chemotherapy, home nursing you may be recommended to have and any out-patient or day care you may need.

Types of policy

Basically, there are two types of policy. One gives you the option of having medical consultations and any hospital treatment privately instead of through the National Health Service. The option can be exercised at any time to suit you.

The other option enables you to have private treatment only if the NHS cannot provide it within a certain time (eg six weeks) of your seeing an NHS consultant.

What influences cost?

The type of hospital you choose will affect the cost (there are often three different price bands) and different parts of Britain have different fees for these. In most cases premiums will increase with age. Married couples usually have to pay less than two single people, and children may be able to be included at special family rates. You may be able to get a discount if you belong to a 'group': for instance, your trade association or professional body may have negotiated a discount with one of the insurers.

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Permanent Health Insurance Continued

Points to note

- If you are self-employed this type of insurance could be essential. It could be your major source of income since state sickness benefits provide only a very low income.

- The index-linked or increasing type of policy is more expensive, but if you take out only a level policy it would be worth just over half as much in ten years' time, assuming an inflation rate of five per cent a year over the period.

- There's a time-lag between the start of your illness and time the policy starts to pay out - the 'deferment' period. You can choose anything from a month... see: Permanent Health Insurance Continued

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