Personal Finance: Private health on parade

PATIENTS LYING and dying on trolleys ... a crisis in nursing ... billions of pounds disappearing into a seemingly gaping hole. This winter the hard- pressed NHS has hardly ever been out of the headlines. Does this strengthen the case for private health insurance ?

In many countries the question would not even be asked. In the US, medical insurance is virtually a necessity. In the UK, however, the mere mention of insurance can stir up feelings of betrayal. Worse, you could be accused of being a queue jumper - the NHS provides for all, regardless of ability to pay, from cradle to grave.

The problem is that for many it simply does not work as they want it to - and the growing list of things charged for or not covered means that for many health provision is already partly privatised.

For some, private medical insurance (PMI) is more a necessity than a nice-to-have option. Anyone who runs their own business needs to be covered if illness strikes; and if being part of someone else's queue is simply not an option, then a PMI scheme could be.

PMI means that if you suffer an acute illness you can get treatment at a time and place that suit you. You will also be treated by a consultant rather than a junior doctor and you are likely to get a room of your own rather than having to share a barrack-style ward. If you are a workaholic you can even carry on working, at least until the anaesthetic hits you.

If you have to buy your own PMI plan and you are employed, ask your employer whether you can join a company scheme. Group schemes cost a lot less than individual plans and will often cover things that are already wrong with you - what insurers call pre-existing conditions.

When buying an individual plan, remember that not all PMI policies are the same and making a mistake can be very costly, especially if the treatment you need turns out not to be covered. The Office of Fair Trading (OFT) has been extremely critical of the way some insurers avoid telling the whole truth to customers.

In particular, the OFT wants to see customers told about just how fast premiums are likely to rise - perhaps at double the rate of inflation or more - and it wants them to understand exactly what they are and are not covered for.

Shopping around for a plan to suit you always makes sense, and a little homework can help you to decide which plan to go for. If your partner already has cover from an employer, save money by just insuring yourself. If your local NHS is better at treating children than adults you may decide not to cover your offspring.

London hospitals are the most expensive, so you may save money by choosing a provincial hospital - but check what would happen if you needed treatment that a local hospital could not offer. Some policies make a charge based on your postcode, so bear that in mind if you want to move. As the table below shows, budget plans can be a lot cheaper, but make sure you know what you are buying. Do you want, for example, to provide full medical information now, or would you prefer to have pre-existing conditions excluded? Ask your adviser or insurer to explain fully the implications of each.

You may be able to save 5 per cent by paying yearly instead of monthly or up to 25 per cent by paying the first pounds 100-pounds 1,000 (or more) of any claims. You may save money by choosing not to have outpatient cover, though such costs can quickly mount up. Consider dental and travel cover.

If you have NHS treatment, many insurers will pay you up to pounds 100 for each night spent as an NHS patient. Or they may pay you if you have to stay with a sick child. If there is a big age difference between you and your partner, it may be cheaper to have individual policies.

Never buy on price alone. Make sure that you understand not only what the policy covers but also what it does not and compare with other policies. Ask too about the insurer's track record on price rises over a 35-year period. Some insurers, such as OHRA and Exeter, do not charge higher premiums just because you get older. Like all insurers, their premiums are still likely to go up each year, however, as medical costs go up.

Contacts: BUPA: 0800 600 505; Clinicare: 01438 740 426; Exeter Friendly Society: 01392 477 200; Legal & General: 0171-451 1132; OHRA: 01703 620 620; Permanent Health: 01923 770 000; Prime Health: 01483 553 461; WPA: 01823 623 000

Andy Couchman is publishing editor of `HealthCare Insurance Report'

the cost of living

How much does it cost? A couple, both age 30, with two young children could pay each month:

Budget plans

Legal & General Essential pounds 33.65

Prime Health Care Supersaver Network pounds 43.06

WPA Poplar pounds 44.15

Clinicare Connect pounds 45.16

OHRA Optional City pounds 46.59

u

Standard plans

Prime Health Care Saver Network pounds 59.63

Permanent Health Healthcover pounds 62.54

Legal & General Essential Plus pounds 89.32

Permanent Health Cover Plus pounds 91.30

BUPA Network LocalCare pounds 93.64

u

Source: Mediquote.

Note: Not all insurers provide premium details to Mediquote.

Premiums assume no excess or other discounts apply