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News: Don't be duped by (some) private medical insurance

Thousands of customers with private medical insurance cover are being short-changed by companies who are using the small print to avoid paying up. That's the claim of Shaun Matisonn, Chief Executive of PruHealth, the private medical insurer.

The most popular way of buying private medical insurance does not require customers to declare anything about their medical history. Known as 'moratorium underwriting', customers are not covered during the first two years of the policy for treatment for conditions which existed during the five years before the policy began.

Matisonn says the principle is a reasonable one, given it discourages people from taking out insurance in the certain knowledge that they need to make an immediate and sizeable claim.

However, what most people don't realise is that if they do need to see a doctor about a pre-existing problem during this two year period the insurer will start the two year exclusion all over again. So for example, if a customer had a knee problem up to five years before they take out insurance and it recurs anything up to two years after the policy begins, they will have to wait a further two years before they will be covered for any treatment.

"We think this practice is inequitable and unjustified," said Matisonn. "It's a sneaky way of reducing the insurer's risk and penalises people unfairly at a time of acute need.

Put another way; imagine you were just a few weeks or even a few days away from reaching the two year deadline when an old condition flares up; you check to see if youre covered only to discover that not only is the answer no, but you've now got a further two years to wait before you can claim for any treatment for that condition.

Just to illustrate the point, in 2001 (fictional) Phil went to see his GP about an irregular heartbeat. It turned out to be nothing too serious, just a symptom of a stressful life. It gave him pause for thought though and on his GP's advice he started to manage his workload more effectively and spend more time with his wife and family. Sure enough the symptoms disappeared but it made Phil wonder what would happen in the event of a serious illness.

Being self-employed Phil had no corporate private medical scheme to fall back on and in January 2004 he decided the time had come to take out a health insurance policy himself. He called a few of the big well-known insurance companies, got some quotes and then selected a policy that seemed right for him.

There was a complicated process where he had to choose between different types of "underwriting". Phil didn't quite follow all the ins and outs but there was an option which meant he didnt have to fill out a medical history form, and thats the one he chose.

It's July 2005 and Phil has just been to see the doctor. The irregular heartbeat has returned and this time with chest pains. The GP can't make a diagnosis and recommends Phil sees a cardiologist. Not a problem thinks Phil, my insurance will cover that. Ill be able to go private and be seen in a few days.

It's August 2005. Phil faces a four month wait before the NHS consultant can see him. The insurance company said that because hed seen a GP about a heart condition less than five years before he took out the policy they wouldnt cover the cost of the consultation or any subsequent treatment.

That wasn't so bad, but now theyre saying that it will be August 2007 before Phil can claim for any treatment for his heart. And that assumes he has no further episodes between now and then. If he does, hell be excluded for another two years. It could go on forever.

Phil has spent over £1,000 on his insurance premiums so far and he's beginning to wonder quite why he bothered.

Moral of the story? Read the policy's small print, or look for a plan where a fixed rather than rolling exclusion period is in force.

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