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How does health insurance work?

Learn about health insurance, what it covers, how premiums work and how to make a health insurance claim.

What is health insurance?

Health insurance, or private medical insurance (PMI), is an insurance product designed to safeguard against expensive medical bills when using private healthcare. Health insurance is not required by law and is completely optional as most UK residents have the right to free healthcare through the National Health Service (NHS). However, many prefer to go the private route to avoid the long NHS waiting lists and be treated more quickly, have more choice and be more comfortable.

Health insurance works very much like any other type of insurance. You pay a monthly or annual premium and the insurance company agrees to pay your private medical costs in line with the benefits, terms and conditions of your health insurance policy.


Choosing your health insurance benefits

Before applying for health insurance, you will usually get a quote to find out how much this would cost. You can get quotes from more than one insurance company to help you compare different health insurance plans or you can ask a health insurance broker to do this for you.

Some health insurance companies allow you to get an online quote by filling in a web form with some personal details such as the dates of birth of the people you wish to cover, your contact information and postcode.

With Freedom Health insurance you can get a quick no-obligation online quote for you or your family which you can then personalise to suit your needs by adding extra health benefits, choosing your cover level and your excess.

What health insurance covers

A health insurance plan is designed to cover the treatment of acute medical conditions which first appear after the start of the policy. Generally, each health insurance product comes with a core cover which provides a basic level of cover, on top of which you may be able to add extra benefits and adjust your cover limits, enhancing your protection.

The core plan will usually include inpatient and day-patient treatment and sometimes cancer cover too. In addition to the core cover, depending on your plan, you can select other health benefits such as:

  • Outpatient cover
  • Physiotherapy treatment
  • Alternative therapies (osteopath, chiropractor, acupuncturist or podiatrist)
  • Dental cover
  • Optical benefit
  • Mental health cover
  • Private GP

Our Freedom Elite core plan includes full inpatient and day-patient treatment, comprehensive cancer cover, MRI, CT and PET scans, NHS cash benefit and 24/7 access to a virtual GP.

Limits on your health insurance benefits may also apply. You can usually adjust some of these limits based on your preferences when buying your health plan.

What health insurance doesn’t cover

Although each health insurance policy and provider may have their own list of what they don’t cover, some common exclusions include:

  • Conditions and symptoms which were present before the start of the policy – these are called pre-existing conditions
  • Chronic illnesses which require long-term treatment and have no known cure
  • Cosmetic surgery
  • Fertility treatment
  • Pregnancy and childbirth
  • Accident and emergency

What is medical underwriting?

Almost all health insurance policies available in the UK will exclude cover for pre-existing conditions. These are medical conditions (including undiagnosed symptoms) which you had before you started your health insurance policy. Pre-existing conditions are not covered even if you have not seen a doctor or had any treatment.

Medical underwriting is the process used by health insurance companies to identify and exclude pre-existing conditions when processing your application. The most common types of medical underwriting are moratorium underwriting and full medical underwriting. You can find out more about each medical underwriting method in our underwriting guide.

Choosing your hospital list

With most medical insurance plans, you already have a hospital list included in the core cover. This gives you the list of private hospitals you can use when making a claim. If you decide to use a hospital outside your hospital list, the insurance company will generally not cover the cost of your treatment in full and you must pay the difference. Many insurers allow you to extend your hospital list by paying extra when buying the policy, giving you more choice when it comes to your treatment.

With our Freedom Essentials policy, you don’t have a hospital list because you can use any hospital in the UK or abroad for your treatment.

Your health insurance premium

A health insurance policy is an annual contract for which the insurance company will charge a premium to cover you for the full year. Most medical insurance companies will allow you to pay the premium either by regular monthly payments by direct debit or in one yearly payment. Freedom Health Insurance give you a 6% discount for paying annually.

How much does health insurance cost?

Your health insurance premium is primarily influenced by your age - the older you are, the more likely you are to need medical treatment, which will be reflected in your premium. In addition, your premium is likely to increase at each renewal as you get older.

Premiums are also influenced by your policy cover – the more benefits you have, the higher your premium will be. For example:

  • Adding in additional benefits will give you broader cover, but they will increase your premium.
  • Some insurance companies may offer you the option to cap some of your benefits to an overall annual maximum limit. This will help to reduce your premium, but if you need to make a claim, and the costs exceed the overall limit, you will be responsible for those surplus costs which may be greater than the premium saving achieved.
  • Some insurance companies may charge an additional premium if you want to use hospitals in central London which are usually more expensive.
  • You may be able to reduce your premium by taking a voluntary excess.

Find out more about the cost of health insurance and, if you need help in deciding which benefits to select in order to get the right cover at an affordable price, you may find it beneficial to speak to an independent broker who specialises in health insurance.

What is the excess on my health insurance plan?

An excess is the sum of money you are responsible for paying towards your medical bills when making a valid claim. With some policies, the excess is voluntary which means you can choose whether you want to contribute towards your claim or not. The higher the excess you agree to pay, the lower your premium will be. Most insurers offer a range of excess options you can choose from, allowing you to better control your health insurance cost.

Some insurance plans might also require you to pay a compulsory excess which works in the same way as the voluntary one, but it cannot be changed by the customer. Any voluntary excess is usually added on top of the compulsory one.

Does it matter where I live when buying health insurance?

Some insurers may charge you more if you live in more expensive areas such as London or other big cities. They do this by asking for your postcode when getting an online quote for example. With Freedom Health Insurance your premium is not affected by your postcode.

Making a health insurance claim

The health insurance claims process can vary between companies and even between health plans and should be fully explained in your policy documents. Generally, this consists of the following steps:

  • Step 1: See your GP if feeling unwell and get a referral letter to a specialist (if needed).
  • Step 2: Contact your insurance company to start your claim and pre-approve your treatment.
  • Step 3: Get treated after you get confirmation your claim is approved and covered.
  • Step 4: The insurance company will settle the bills either by paying them directly to the hospital or by reimbursing you, depending on your plan and the nature of your claim. 

If you need to pay an excess, this will usually be deducted from the amount paid by the insurance company.

For certain types of benefits (such as dental cover), you will not usually need a referral letter; you just pay from your own pocket and the health insurance company will reimburse you directly (if this option is covered by your plan). Here’s some more information about the Freedom Health Insurance claims process.

Straightforward health insurance

Even though you might think health insurance is complicated, here at Freedom Health Insurance we strive to make it simple and straightforward. From getting a quote to making a claim, we are here to help you through the process with:

  • Quick and easy online quotes and applications. Get a free quote now!
  • Many reasons to choose us including our no location-based pricing.
  • Dedicated claims advisors who will support you through the whole process.

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