Private health premiums reflect risks, say insurers

As this past year has taught us, nothing is more precious than the health of our loved ones. Health insurance provides peace of mind that should the worst happen to you or your family, you can have a speedy diagnosis and reduced waiting times and start treatment as quickly as possible.

Health insurance is designed to mitigate risks associated with potentially large, unexpected healthcare costs that people might not be able to afford to pay for all in one go.

ABI data shows that the average cost of health insurance is £2,207 per year for an individual. A hip replacement is one of the most common operations — the average standalone cost for that is £13,000. A knee replacement costs on average nearly £14,000. Should you need swift treatment for something more serious, such as cancer or a heart condition, you could be looking at significantly higher bills. Your premium will also cover new treatment or access to drugs that the NHS might otherwise deem too expensive.

As with all insurance, the premium is priced to reflect the risk. While it will be down to individual insurers to determine prices, a number of factors may be used to calculate this. Unsurprisingly, age is one of the most important, given the likelihood of making a claim increases as we get older. 

Any pre-existing health conditions will also be a factor, as well as your current health and any issues that might impact it, such as smoking. Equally, tracking your fitness and demonstrating that you’re maintaining a healthy lifestyle may go in your favour.

If you’re taking out health insurance for the first time, shop around for the policy that best suits your needs. If you’re considering switching, it’s important to seek independent advice and carefully compare what’s on offer, particularly if you’re having treatment for an existing condition. Understanding the type of cover available, whether that is basic or more comprehensive, can help you manage costs.

Unfortunately, as some readers know, premiums can increase upon policy renewal. Medical technology is pushing up costs as the equipment needed becomes increasingly sophisticated, and there’s an increase in demand from an ageing population for key treatments. The number of claims you make may also have an impact — unless you’ve protected your no claim discount. 

Finally, it’s not just our physical wellbeing that can benefit. In 2019, there was a 64 per cent increase in claims for treatment for mental health. And whilst they’ve played their role in supporting the NHS during the pandemic, independent health services remain open, and insurers have expanded the services they provide, including remote GPs and specialist mental health support.

Health insurance has a vital role to play in complementing the NHS, to reassure you that you’ll have a quicker diagnosis, avoid lengthy waiting times, and provide access to new technology and services not always available on the NHS. There are no short cuts when it comes to protecting our health.

James Dalton is director, general insurance policy, Association of British Insurers