Is health insurance a scam?

You might wonder whether health insurance could be a scam to take your money and find reasons to deny your claim. Is it worth the cost? This guide examines why health insurance may not suit you so you can make an informed choice.

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How does private health insurance work?

When you invest in private health insurance, you can choose from various insurers across the marketplace. Each insurance company offers different coverage levels, and you can tailor your policy to suit your needs.

For example, you might decide on a basic plan that covers inpatient treatments, such as surgery and cancer care. You can also add optional extras, like outpatient treatment that covers diagnostic tests, scans and other therapies, such as outpatient physiotherapy.

When you're satisfied that the policy meets your needs and budget, you start paying your monthly or annual premiums, and your coverage begins immediately.

Reasons why you might think health insurance is a scam

If you suspect that health insurance could be a scam, you probably have your own reasons for that. You may think private healthcare services undermine the NHS and want to avoid becoming part of a two-tier system. You may have always had excellent treatment from the NHS and don't see the point in paying when you can get the healthcare you need free of charge.

There are good reasons for investing in private health insurance, but there are also circumstances where private healthcare isn't the right choice. Understanding how health insurance works and the options available can help you decide.

1. The cost of the premiums is too high

You may have looked at private health insurance costs and felt they were too expensive, particularly when you can get free treatment via the NHS. We all need to work within our budget and prioritise spending appropriately. Health insurance may appear beyond your means when you look at the average monthly cost.

However, it's worth remembering that you can tailor your coverage to suit your needs. You can opt for a basic policy without any optional extras. There are other ways to reduce the price of your policy, such as adding an excess or allowing your insurance company to recommend a consultant rather than having a completely free choice.

A broker can help you to source quotes that suit your budget.

2. I'll pay in for years without needing treatment

There is a risk that you'll start paying for medical insurance and never need to use it because you stay healthy. No one can predict the future; you could pay premiums for many years and then make several claims because you develop health problems as you age.

Self-insurance can offer an alternative if this is something that worries you. Instead of sending premiums to an insurance company, you open a savings account and pay into it regularly, as you would if you'd taken out an insurance policy. Then, if you want private healthcare, you can use the money you've saved to pay for it. This can be a great option if you need surgery, as most private healthcare services will give you a fixed-price quote. It's less practical if you need cancer treatment, as this can continue indefinitely and run into hundreds of thousands of pounds.

Self-insurance also means you can use your money in other emergencies; whilst you might save to pay for private treatment, you have more choice about how you spend it.

3. My health insurance company will deny my claim

Rejected claims often result from misunderstandings about what coverage your medical insurance provides. When you buy a policy, your insurance company will send you information to confirm what treatment the plan will pay for. There will also be policy exclusions detailing types of treatment your insurance won't cover. These include things like cosmetic surgery, addiction treatment and normal pregnancy and childbirth. They also exclude pre-existing conditions.

What are pre-existing conditions?

A pre-existing condition is an illness you had before you had medical insurance. It can include anything you were treated for or asked your doctor for advice about in the five years before you bought your insurance. For example, you might have seen your GP about pain in your shoulder. You buy medical insurance a year later, and then a year after that, your doctor recommends you have a shoulder replacement. Your insurance won't pay for a private operation as you had shoulder pain before.

If you choose full medical underwriting, you can provide your insurance company with medical history details at the start of your policy so you know what's covered or excluded from the outset.

4. I can't use my health insurance for things I really need

Medical insurance is great for conditions that your doctors can cure with a course of treatment, letting you get on with your life. It won't be for you if you have a chronic illness, such as asthma or diabetes, that needs regular monitoring and management, as these types of illnesses are excluded from coverage.

Unfortunately, it likely won't be right for you if you have a lot of pre-existing health issues. For example, if you have had a back problem and want insurance so you can have private treatment if it gets worse, your insurance may not cover you. You'll need to have been symptom-free for five years before you buy the policy or two years afterwards if you want it covered.

A self-insurance or self-pay approach may be better, as it allows you to pay for care your health insurer won't cover.

5. Will the customer service be any good?

One of the main benefits of healthcare cover is that it gives you quick access to private treatment. However, that only applies if you can get claims approved promptly. Most insurance companies are big businesses employing a lot of staff. Inevitably, some people's customer service experience is better than others. If your claim is complex, it may take longer to decide, and the underwriting your policy has can also have an impact.

Many insurers ask you to start your claim online or via an app. While this is quick and convenient for some, it can be challenging for others. Some insurers prefer you to call to make a claim. However, this can leave you waiting on the phone to get through to a busy call centre.

Reading third-party reviews online lets you see what other customers say about the service. You can read our summary of the top eight UK health insurers here. Most insurers also share links to third-party review sites, such as Feefo or Trustpilot, on their websites.

6. Private health companies are only interested in profits, not patient care

Whether you choose NHS or private treatment, your doctors will be highly trained and experienced and offer the same standard of care.

Some private healthcare services are profit-making businesses with shareholders to keep happy. However, others invest their profits back into patient care and better facilities. Private hospitals can have facilities and catering closer to a luxury hotel than a hospital. They're also free to invest in new equipment and treatments the NHS doesn't currently approve. That could mean you benefit from cutting-edge technologies that can produce better results and a quicker recovery.

The picture is slightly different if you need urgent treatment. Insurers provide virtual GP services and helplines for medical advice 24/7. However, they can't treat you in a medical emergency. If you're having a stroke, a heart attack or even severe complications after private surgery, you'll need the NHS.

What are the alternatives if health insurance isn't right for me?

Medical insurance isn't the right choice for everyone, so if you've ruled it out for any reason, you can still have private treatment if you want to. Alternatively, you may prefer to stick with the NHS.

NHS treatment

NHS care is delivered by experienced staff who are experts in their field. It's also free to use. The downside is that you may face a long wait for treatment unless your condition is life-threatening.

However, you can usually choose which consultant you want to see and where you want your treatment to occur.

Self-funded private treatment

If you have savings, you can use them to self-fund your private healthcare. You can approach a healthcare provider directly and get a fixed-price quote for surgery or other therapies. This option gives you a completely free choice of the hospital you go to and the consultant you want.

If you've seen an NHS consultant, you may also be able to pay privately to receive quicker treatment. Consultants offer private consultations and surgery.

Getting professional advice

myTribe guides help you understand your healthcare options so you can make an informed choice.

If you'd like more information about private medical insurance before you decide whether it's for you, get in touch for a comparison quote. We'll put you in contact with a specialist, regulated broker who'll provide advice tailored to your circumstances.

Disclaimer: This information is general and what is best for you will depend on your personal circumstances. Please speak with a financial adviser or do your own research before making a decision.

Chris Steele
Cert CII (F1, IF7 & I10)
Founder and Editor

Chris is our resident private health insurance and healthcare expert and has over a decade's experience writing for and about private medical insurance and private treatment. He's a Cert CII qualified member of The Chartered Insurance Institute and his research and work are often cited in the press. Chris is also contributing writer to numerous other financial services publications.

Frequently Asked Questions

Are health insurance policies a scam?

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We don't think so, but it may not be the right choice for you, depending on your circumstances. Speaking to a broker, researching and understanding what your policy covers will help you choose wisely.

Can I have private healthcare without insurance?

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Yes. You can fund private treatment yourself if you have savings. Some providers also offer a finance option. Your provider will give you a fixed-price quote so you understand what's included before you decide. You could also self-insure, with a savings account created specifically to cover healthcare costs.

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