It is the prerogative of the insurance buyer to find and understand the rights of policy holders before purchasing a personal medical insurance (PMI). It is important to read the terms and conditions of the policy document carefully and to know exactly what is not covered.
Some key facts to note before buying medical insurance:
The Prudential Regulatory Authority (PRA) and the Financial Conduct Authority (FCA) regulate private medical insurance policies in the UK. This was earlier done by the Financial Services Authority (FSA).
Private medical insurance providers and brokers are required by the FCA to have complaints procedures in place. In case one is not satisfied with the response of the insurance company in resolving a problem, one may approach the Financial Ombudsman Service (FOS). It is a free and independent service to settle disputes.
The Financial Services Compensation Scheme (FSCS) is UK’s legal fund for clients of authorised financial services. It is an independent organisation set up under the Financial Services and Markets Act 2000. In the event of insolvency of the insurer or its inability to honour a claim, the FSCS pays compensation to the insurance holder.
The Data Protection Act 1998 and other ancillary laws mandate medical insurer companies to treat personal information including medical details confidentially. Insurers are required to inform policyholders about personal information usage and circumstances when such information is shared with third parties. Policyholders have the right to seek details of information an insurer has about them.
Declaration of Medical History
Medical insurance providers require a buyer to disclose medical history in the application for cover at the time of purchase. This is done in two ways.
• Full Medical Underwriting: This entails declaring your full medical history. It is advisable to disclose everything and not withhold any information. An insurer has the right to refuse a claim if it is found later that one was already suffering from or has suffered from a particular condition in the past. It is important to note that medical insurance companies usually do not provide cover for ‘pre-existing conditions’ when starting a new policy for the first time.
• Moratorium Underwriting: Most insurance companies offer this option where details of personal medical history are not required. With a moratorium scheme, you do not have to provide detailed medical information; however, pre-existing conditions within the last five years of the commencement date of the policy are not covered under the plan, unless you have been symptom or treatment free for a period of two consecutive years.