Why Health Insurance Should Be a Cornerstone of Your Financial Planning

15/12/2023

When it comes to personal finance and financial planning, most people will spend most of their efforts on pension schemes, savings and investments. But, while these instruments all play a vital role in creating a robust personal financial strategy, it's vital not to neglect another equally important component - health insurance. In this article, we’re going to take a look at why private healthcare insurance in the UK is an essential part of a healthy financial plan.

What is Private Health Insurance?

Private health insurance, often termed private medical insurance (PMI), is an insurance policy designed to cover the costs of private healthcare, from diagnosis to treatment. Unlike the National Health Service (NHS), which is funded by the state, private health insurance provides you with a choice of when, where, how, and by whom you get treated. It can cover a wide array of health issues and diseases, offering a swifter route to consultations, treatments, and hospital admissions.

It’s essential to understand that private health insurance is designed to work alongside, not replace, the NHS. It generally covers acute, non-emergency short-term health issues, while the NHS continues to provide care for chronic and incurable illnesses and emergencies.

Benefits of Private Healthcare in the UK

While medical insurance might not appear to be a necessity given the existence of the NHS, having access to private healthcare in the UK comes with a range of benefits not just for your health, but in creating a comprehensive financial plan for you and your family’s future:

Prompt care

One of the prime benefits of private healthcare in the UK is the speed of service. As any NHS user will know, waiting times in England and Wales are sky-high - and don’t appear to be speeding up any time soon. Just last month, the number of people waiting on an NHS appointment in England rose to 5,740,749, an increase of 2.3% from the previous month. Similarly, the average waiting time rose to 11.5 weeks, a 5.5% increase from the previous month, and the number of people waiting on treatment is now at 7.4 million.
With private health insurance, waiting times for consultations and procedures are usually significantly shorter than the NHS, and this can lead to quicker diagnoses and faster access to treatment, which in turn, can result in improved health outcomes.

Access to new treatments

Furthermore, private healthcare often provides a wider choice of treatments and medications, including some that may not be available or have restricted availability on the NHS. However, do note that access to new and emerging treatments isn’t always a guarantee, and the availability of these medications will depend on your chosen provider, your plan, and the condition you’re dealing with.

That being said, private healthcare providers have been known to offer new and emerging treatments for cancer that aren’t yet widely available on the NHS.

Prevent sky-high private medical costs

The benefits of a PMI aren't purely medical, however: private health insurance can also offer significant financial protection. Unexpected illnesses can lead to substantial unexpected costs if you decide to go private, but with private health insurance, these costs can be largely mitigated, ensuring your savings and investments aren't adversely impacted by sudden health-related expenses.

Why is Insurance an Essential Part of a Healthy Financial Plan?

As the old saying goes, health is wealth. But health is unpredictable, and an unexpected health issue can disrupt not just your personal life, but your financial plans as well. This is where insurance, particularly health insurance, takes centre stage. By safeguarding you against high medical costs, health insurance ensures your financial stability and allows you to stay on track towards your financial goals.

Put simply, health insurance offers you a form of a safety net; a layer of financial protection against high or unexpected healthcare costs. Without it, a major illness or injury could lead to significant out-of-pocket expenses, potentially derailing your financial plans and future aspirations. Thus, incorporating health insurance into your financial plan can help to safeguard your financial future against such unexpected setbacks.

Protecting Your Financial Plans

Your financial plans - be they saving for a home, planning for your children's futures, or preparing for retirement - are often long-term strategies. An unexpected health issue can jeopardise these plans, as diverting funds to cover medical costs can push your financial objectives out of reach. Health insurance ensures that such redirection of funds is minimised, keeping your financial plans intact and on track.

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