Private health insurance can help to ease the burden on the NHS - Conal Gregory

Around 11 per cent of the UK population has private health cover in some form. It is usual in advanced industrial economies like France, Germany and the Netherlands to run insurance-based schemes.

Private funding of non-urgent operations has been established for decades but extended in the pre-coronavirus period to accident and emergency cover. New technologies are both improving service provision and revolutionising the products available.

“Insurers are making a positive difference to the ongoing health and wellbeing – both physical and mental – of their customers while providing an outstanding level of care at the same time,” says Greg Levine from VitalityHealth.

One of the reasons for funding private care is to have a convenient, digital and personalised experience, akin to online retail. Technology such as voice assistants and chatbots are being used to provide continuous care and valued-added services.

An example is the growth in virtual GP services that enables access to primary care. Preventative healthcare solutions are also being developed with encouraging results. Claims costs have fallen by 33 per cent when physical activity levels have increased.

With more emphasis on mental health, the NHS has been struggling to give sufficient access to psychological therapies. Private health insurance (PMI) is helping to alleviate the burden on the NHS by providing holistic mental health services and focusing more on preventative measures.

With PMI supporting and reducing pressure on the NHS, it is surprising that successive Chancellors have increased the taxation on premiums from six to 9.5 per cent and since 2017 to 12 per cent. Furthermore, medical costs run ahead of inflation which feeds into the cost of insuring.

The market has responded with wider cover for more affordable products which can help maintain a high quality of life through treatment of acute conditions.

James Love, principal at Mercer Marsh Benefits, says: “As the demographics covered have changed, so have the plans.

“They are now covering more chronic conditions, gender dysphoria, assisted fertility and primary care through virtual GPs.”

PMI is not designed to cover such conditions as arthritis, asthma, diabetes or epilepsy.

The Association of British Insurers says there are 732,000 individual policies which cover almost 1.2m. Personal PMI is 44 per cent of the market with premiums of £1,662.3m and claims paid amounting to £1,023m.

The range of cover is wide and may include eye tests through to hospital stays and therapy sessions.

The most usual reason for purchasing PMI is to cover the cost of specialist consultations and diagnostic tests including scans. Dental protection is rarely included and, if that is required, a separate policy needs to be taken.

Some policyholders prefer to obtain a lower premium policy in exchange for a higher excess, which means they fund the first part of any expense incurred. Usually all costs are settled directly by the insurer with hospitals and consultant registered. This reduces administrative costs and helps prevent fraud.

PMI is a vital area to consult an experienced independent broker. The language used can be complex and made more difficult by the sizeable number of options. A broker can search the field to find the policy most appropriate to your personal needs.

A lower premium may also be secured. A worrying aspect is that people are not reviewing their policies, according to Kim Strugnell, director of Howden, a specialist insurance broker.

Her firm has obtained savings of 26 per cent for members of the Country Landowners Association. Even by advising that Howden has been consulted has prompted providers to offer a free month.

Brokers are reimbursed by insurers and so there is no reason not to use their expertise and negotiating skills. Around 18 per cent of policyholders switch provider each year.

Avoid comparison websites and gimmicks like gift vouchers and free pens. Unlike an insurance field such as motor, PMI is far too complex to lend itself to a simplistic approach. Instead look particularly at:

- Range of benefits

- Limits on cancer care

- How pre-existing conditions are treated

- No claims discount if applicable.

It is a fallacy to think that acceptance will depend upon the GP. Love says GP contact occurs in less than one per cent of times.

The postcode is one of many factors although a regional survey by Cheltenham broker, Regency Health, revealed monthly premiums in Newcastle were almost half those for London, reflecting in part the higher cost for specialist London facilities.

Among major insurers, Aviva offers a nine per cent discount if a partner is added by comparison with buying two individual policies. The Western Provident Association (WPA) provides three levels of cover along with cancer and lifestyle care options. Benenden in York has no exclusions for pre-existing medical conditions when joining.

Whilst certain providers are household names, friendly societies are often overlooked. They are mutual organisations with no shareholders and several specialise in health protection including the British, Cirencester, CS Healthcare, Exeter and Holloway.

CS Healthcare, originally restricted to civil servants, offers access to over 300 hospitals in the UK and 24/7 online access to a GP from anywhere in the world.

The Exeter has an award-winning plan, called Health+, which combines core cover with flexible options (such as a choice of hospital lists and mental cover) to build the right policy. It also has the facility to choose between community-rated premiums or policies with a no claims discount.

Via a smartphone or tablet, up to four remote GP consultations with a second medical opinion and six virtual consultations for physiotherapy and mental health support are included each year.

Most insurers now allow self-referral for mental health and musculo-skeletal physiotherapy. Some, like Bupa, extend this to symptoms for cancer such as a breast lump.

Increasingly, insurers are going beyond paying for diagnosis, treatment and care when policyholders are ill or injured.

Resources and guidance are given to lead healthy, active lives such as on diet and nutrition. AXA PPP has a range which includes online workouts and yoga as well as discounted products and services like sportswear.

Finally, consider defraying the cost of PMI by investing in the sector.

This could be through a tracker based on the MSCI World Health Care Index, an individual company (such as the online PMI broker, eHealth) or a fund (notably the Worldwide Healthcare Trust).

The latter is an investment trust which was launched in April 1995 and has 72 holdings including Merck. It is up 72.9 per cent in five years.