Why private health insurance could be cheaper than you think

Many people think of private health insurance as an expensive piece of cover that just isn’t value for money.

However, there are various levels of cover available, so you can choose a policy based on what you can realistically afford.

And several insurers have introduced policies with added perks that could actually save you money in the long term.

Let’s take a look first at how to pay less to go private and then at how some policies with added benefits could save you money on other parts of your household spending.

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Ways to get cheaper cover

The first, and most obvious, way to save is to shop around. While insurers’ policies will often differ, many aspects will be the same, but the cost will vary.

However, the biggest savings can be made in other ways.

Opt for a cheaper, or budget, plan

Most insurers offer three levels of cover: comprehensive, standard and budget. Budget plans trim your costs by excluding outpatient treatment such as initial diagnostics and consultations, which you can get free on the NHS if you’re prepared to wait. But you are still fully covered for serious inpatient treatment, including anything from a hip replacement to cancer care. Alternatively, choose a plan targeting specific illnesses such as heart disease or cancer.

Increase your excess

When you take out motor insurance, you can cut your premium by agreeing to pay the first £50 or £100 (or more) of any claim. The same principle applies with health cover. A small excess of just £100 or £250 could slice 10% to 20% off your premiums. Some health insurers take the principle to extremes, with excesses in the thousands. The higher the excess, the lower your premiums. This means you are only likely to be able to claim for major illnesses.

Many insurers also offer no-claims discounts, which can take up to two-thirds off your premiums. Just make sure you're not put off claiming vital treatment by the prospect of losing your no claims.

Limit your choice of hospitals

Some private health insurance plans offer you access to every private hospital in the country, including central London teaching hospitals. This is sometimes called the A-list or Band A. That’s great if you can afford it, but you can save money by limiting your choice to cheaper B-list or C-list private hospitals, or even NHS pay-beds, which come under Band D.

Some insurers also offer the option of refunding your inpatient and outpatient costs, providing you use one of their designated hospitals. If you live near one of these hospitals, this can be an easy way of reducing your costs.

Agree to go on an NHS waiting list after a certain time

Some insurers offer a 'six-week clause'. If the local NHS waiting list for your condition is less than six weeks, you must get your treatment on the NHS. If the waiting list is longer, you go private straight away.

Agree to pay some of the treatment costs yourself

Co-payment or shared responsibility plans cut your premiums if you agree to pay a share of any treatment costs. Insurers believes this helps cut frivolous claims, and they can then pass the savings on to you.

Some insurers pay part of your premium into a bank account in your name, with the remainder set aside to fund any treatment. When you claim, you pay a percentage of the cost from your personal bank account and the insurer pays the rest, up to cover limits. If you don’t claim, the money in the deposit account is yours (although the account doesn’t pay interest).

Take the money and shop around yourself

Some insurers provide you with a pot of money for necessary medical treatment. You can either spend this on private treatment, or seek treatment on the NHS and pocket the cash instead.

Look for 'reward' plans

You can also look for plans that cut your premiums or offer cashback because you lead a healthy lifestyle, such as eating healthily and going to the gym.

Obviously there are potential pitfalls to many of the above. You need to weigh up the cost of making cutbacks in terms of either cover or cost against the potential bill you could be landed with and/or being refused treatment.

Read the small print carefully and ask the insurance company as many questions as you need to.

Added benefits

As we mentioned at the start, many insurers are now also adding additional benefits in an attempt to lure new customers.

Depending on your lifestyle, your interests and where you live, these could save you some serious money, as well as giving you private health cover.

For example, PruHealth offers a free cinema ticket every week to either Cineworld or Vue cinemas. With an annual Unlimited pass for Cineworld costing a minimum of £196.80 a year and the cost of one ticket a week at Vue adding up to an annual bill around the £500 mark, those are significant savings if you’re a big film fan.

Other insurers, including Aviva and PruHealth, offer discounts on gym membership, which again could add up to hundreds of pounds a year in savings.

If these are things you would pay for anyway, then the savings you could make by having them via your private health policy could be significant.

Of course, conversely if you’re not going to use them then it will be a waste of money. So think carefully before signing on the dotted line.

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