Money: Rest easy as they operate

Despite new guidelines, you can't assume that all your medical needs will be covered by private insurance. Tim Collison reports

Ask anyone to name a private medical insurance firm and most people will come up with either Bupa or PPP. Between them, these two big names have a near stranglehold on the UK's private medical insurance (PMI) market, and take about 75 per cent of the business.

Unless you really want to shop around or go to a broker, it is easy enough just to stick with these firms. Shopping around is much more complicated in the PMI market than it is for motor insurance. Until recently, health insurers were under no obligation to offer similar, benchmarked deals. Potential customers found it almost impossible to compare like with like.

Now the Office of Fair Trading (OFT) has issued firm guidelines for insurers, with common definitions of illnesses and treatments. All literature should be easier to understand and compare. And if you are in the market for this cover, it is worth looking beyond Bupa and PPP as the smaller insurers are offering more competitive deals in an attempt to buy market share.

If you are planning to take out a PMI policy, the bare minimum of cover you should look for is surgeons' fees, theatre fees and in-patient care. These three are pretty standard on all policies, but you should check.

To keep costs down, many people are taking out budget or basic policies. Essentially, these provide the minimum level of cover but will usually exclude out-patient care and other non-essential treatment.

A 30-year-old living in London would pay pounds 238 a year for WPA's most basic policy, Poplar. The same person would pay pounds 299 for BCWA's Vital cover. The problem is that it is still difficult to tell whether you are comparing like with like, and there is a frightening array of policies. PPP, for example, has 12 policies, all with slightly different levels of cover.

With budget policies it is essential to check what you are not covered for. For example, with BCWA's Vital policy, all out-patient treatment is excluded, but PPP's slightly more up-market budget contract, Key Plan, covers surgical procedures as an out-patient but not consultations or physiotherapy. Some budget policies may offer out-patient cover, but will place a limit on treatment.

Clinicare's Club contract has a limit of pounds 1,000 for specialist out-patient care such as osteopathy and chiropractic treatment.

Also check whether treatment is immediately available under the terms of the policy. Norwich Union's Select Care 6 keeps premiums low, but you may have to wait up to six weeks for an operation.

If you are looking to cover all eventualities then a comprehensive policy is probably best, but be prepared to pay for it.

For BCWA's top-of-the-range Preferential cover, a 30-year-old Londoner would pay pounds 969 a year. WPA's Oak would set the same person back pounds 1,149.

There is a seemingly endless list of benefits with a fully comprehensive policy. Norwich Union's Premier Care boasts full in- and out-patient care, home nursing, hospice care, psychiatry, pregnancy and childbirth cover, an annual health screening, private ambulance costs and emergency treatment overseas.

Prime Health's Primecare Gold contract will even pay a lump sum pounds 1,000 if you are diagnosed with a critical illness such as cancer, and pounds 10, 000 if you become permanently disabled.

Regardless of which type of policy you take, it is crucial to remember that it will not cover you for any conditions that you have when you take out the insurance.

When you take out a policy, you will be asked to list any pre-existing conditions, which will usually be excluded from the policy. However, some policies (known in the industry as moratorium policies) will not require you to disclose any medical details at the outset, but will stipulate that any conditions that you have had in the past five years will not be insured for the first two years of cover. Not surprisingly, many people have been confused by this type of cover, thinking that they are covered for everything from day one.

In return for a premium increase of up to 150 per cent, Clinicare will cover some pre-existing conditions from the day you take out the policy. If you are uncertain about pre-existing conditions, you should seek the advice of a specialist independent financial adviser or insurance broker.

Another thing that often catches out policy holders is the "banding" of hospitals. The costs of treatment vary greatly around the country and so most insurers will group hospitals within four price bands. Make sure that your chosen price band has your nearest or preferred hospital. Also, check whether the insurer is part of a hospital network. Such an arrangement is likely to secure you a reduced premium but could restrict your choice of hospital.

And finally, although price is major factor with this type of insurance, make sure that you understand any discounts that you are offered. Most policies will offer a cut in premium for a pre-agreed "excess", which you agree to pay yourself. Prime Health even offers a no-claims bonus. However, these reductions vary from insurer to insurer.

Typically, if you agree to pay the first pounds 100 of a claim, you will get a 10 per cent discount. But check whether the excess is per claim or per person. If you have a family policy on a per claims basis you will end up paying an excess every time someone makes a claim.

n Contacts: Private Health Partnership, 01943 851133; Healthcare Matters, 0800 458 1616; Bupa, 0800 289577; PPP, 0800 335555; Norwich Union, 0800 142142.

n Tim Collison is editor of `Professional Broking' magazine.

INSIDER'S GUIDE

How to get the best health care

If you are generally happy with the NHS you could pay cash for a private operation - many hospitals offer payment by instalments.

Hospital cash plans are much cheaper than medical insurance. They pay out cash if you go to hospital, and some cover the cost of seeing a consultant or physiotherapist privately - allowing you to beat the queues. Call 0113 232 0903 for a list of cash schemes.

Another option is to pay to see a consultant - to put your mind at rest - and then go back to the NHS.

Most private medical policies cost more if you live in London or the South-east.

A good locally prominent GP is possibly the best insurance you can get. He or she will have strong links with hospitals and should be able to arrange the best care.

If you are new to an area look for a GP surgery with several partners and a good administrative team.

When buying health insurance look beyond Bupa and PPP as some of the smaller health insurers offer more competitive deals.