Is health insurance really worth it?

What is health insurance?

Health insurance in the UK often refers to Private Medical Insurance, which offers paid-for healthcare treatment, as opposed to the NHS, which is free at the point of use. What’s more, you can access breakthrough treatments, including new cancer drugs, as soon as they’re licensed and proven to work (subject to medical history and cover options chosen. Out-patient drugs are not covered).

The health insurance has been designed to help people when they face major health issues like cancer, heart disease or stroke – as well as other medical conditions that can stop them getting on with their lives, such as joint pain and other musculoskeletal issues (subject to the cover chosen and medical history).

Pros:

• Speedy access to treatments – you can see a doctor more quickly instead of the long wait through NHS.
• Better privacy – you can often get a private room on a ward.
• Additional treatments – while most treatments and drugs are available on the NHS, if you have a particular need you may have to pay for private healthcare.
• Extras – firstly, some insurers offer a travel and/or income protection insurance free of charge as an addition to the policy. Secondly, you can get access to various health and wellness discounts and promotions, gym membership at low cost etc.

Cons:

• The insurance can be quite expensive and most likely the cost will increase as you get older.
• The pre-existing conditions and some chronic ones are not covered.

Is health insurance taxable?

Yes, if your employer pays for it. It is classified as benefit in kind and tax is paid on the taxable value of the benefit. HMRC defines this as the cash equivalent value. This is usually the amount it costs your employer to provide you with the benefit. However, if you personally cover the cost of the private health insurance, then it is a tax-free benefit to you.

What is income protection?

Income Protection is designed to pay a monthly benefit if you are unable to work due to illness or injury, which can be used to keep up to date with your rent / mortgage and other monthly costs.

However, given the very low level of state incapacity benefit, the first port of call is usually Income Protection so at least all your essential bills are paid for each month. After all, we’re fortunate in the UK to have the NHS which provides healthcare free at the point of use and so there’s generally less need for Private Medical Insurance than for Income Protection.

Pros:

• It will cover you if you are too injured or ill to work.
• If you are made unemployed without prior warning.

Cons:

• There is a deferred period – also known as an excess period or waiting period – is a length of time you need to wait while out of work before you are able to claim. These periods can range from the first day of absence to 60 days or more.
• In some cases, the insurance may cover only very small amount of your costs. Please make sure you read carefully the Terms & Conditions of the policy.