How to cut down your wait

special report healthcare; Medical insurance is booming.

As National Health Service queues get steadily longer, and doubts about its future grow, health insurance continues to boom. Giants such as BUPA and Private Patients Plan may dominate the market, but as the business has expanded, the likes of Norwich Union, Prime Health and OHRA have moved in, cutting premiums to attract customers.

This has triggered off a marketing war, with a mass of special offers and discounts. BUPA, for instance has just launched a scheme which offers you discounts on "health related items" such as membership of a gym or dental insurance once you sign up.

Some 6.5 million people - more than 10 per cent of the population - now have some cover to pay for private hospital treatment. Many of them are insured through schemes at work. The insurance may be a perk, but even staff who pay premiums will find them typically 40 per cent lower than those for individual subscribers.

Most providers of private medical insurance (PMI) offer plans in three forms - comprehensive, standard and budget cover. There used to be a great vogue for six-week waiting plans, which allowed you to get private treatment if the waiting list for your particular operation on the NHS was more than six weeks long. Giants such as BUPA and PPP do not promote these schemes any more, even if still available.

Whatever PMI plan you take will have its restrictions. No insurer will pay for private consultations with a GP on standard plans, and will be dubious about covering any pre-existing medical conditions you may have.

"Insurers impose a waiting period if you have had heart trouble or ulcers in the past," says Penny O'Nions, one of the few independent financial advisers who is also a doctor. "They will usually exclude them from your policy for the first two years, but take it on after that if you have had no recurrence in the meanwhile. Anyone with a chronic problem, like diabetes or epilepsy for which they take medication, will probably find it excluded completely."

Insurers impose a ceiling on charges for each operation or stay in hospital. The amount will reflect charges area by area. Insuring as a part of a group - even a family - can bring down charges, and budget prices cut costs. But inevitably cover on the budget plans will not be as wide as on mainstream policies.

BUPA, for instance, will cover outpatient treatment, transplant surgery and psychiatric care in hospital on its top-of-the-range insurance but excludes all three on its budget plans. If you take the group's budget plan, you have to go into one of 150 private hospitals, though the group normally offers a range of 800 hospitals on its other schemes. Norwich Union's trust care plan will only cover paybeds in NHS hospitals.

What other options exist for cutting bills? Prime Health offers no claims discounts, where premiums come down by 10 per cent if you do not claim in two years. Meanwhile Prime Care, like BUPA, runs a system where you agree to pay the first pounds 100 of any bill for a 10 to 12.5 per cent cut in premiums, depending on the plan.

Attractions can lie in the small print. The Dutch- based group OHRA runs a system where premiums do not rise automatically with age. If you take out cover at 29, you will continue to pay the rate applying to people in their thirties when you are in your thirties and forties. BUPA and PPP planholders will normally find premiums rising automatically at five- year intervals.

Hospital Cash plans are very different. They provide you with a regular income for each day you are in an NHS hospital, though they will not generally provide you with anything when you leave. BUPA's plans will normally pay between pounds 30 and pounds 100 a day. You can use the cash to pay for outpatient treatment, physiotherapy or even dental treatment.

But anyone with a long-term illness such as cancer will spend far more time at home than in hospital. Permanent Health Insurance (PHI) will not pay for treatment but it will provide an income for as long as accident and illness makes work impossible.

PHI costs vary sharply with your job. Most companies have five professional categories, where someone doing clerical work will pay the lowest premiums while steeplejacks and divers will pay the highest - assuming they can find an insurer to take them on. Publicans, journalists and doctors are somewhere in the middle. In the past, housewives did not come into the picture - because they had no income to replace. But now one or two companies, including Norwich Union, will provide cover for them - up to a limit of around pounds 500 a month.

The time lag you accept between having to give up work and starting to receive your monthly income is important too. You can choose to wait anything form a month to two years. Many people opt for a six- month deferment, because most companies' sick leave provisions will cover them until then. The third choice you have to make is whether to go for a flat income or one that moves up, usually at two to five per cent a year.

What differences will it make? Norwich Union's plan for clerical workers will normally pay a potential pounds 1,000 a month until people recover - or reach the age of 60. A man in a clerical job would pay pounds 26.02 a month for cover if he chooses a month's deferment. But agreeing a six month's wait cuts the bills to pounds 12.02 a month and a 12-month wait will bring it down to pounds 10.66. Payments should continue until you are considered able to do your own or a similar job in the more generous contracts, or any jobs at all in the cheaper ones.

All medical insurance policies are complex and have their snags. So it as well to resist pressure to buy whatever comes first. Anyone wanting a plan should talk to an independent financial adviser. Specialists include the Sedgwick group, whose medical specialists are in Slough, Penny O'Nions, based in Amersham, and the Leeds-based Private Health Partnership.

Penny O'Nions: 01494 726688. Health Care Partnership: 01943 851133. Sedgwick Group: 01753 503700.