Private Medical Insurance & Associated Insurances
Core concepts
PMI reimburses eligible medical treatment costs. Know underwriting approaches (full medical underwriting, moratorium, medical history disregarded), excesses, co-payments, no-claims discounts, and exclusions (pre-existing conditions, chronic conditions, cosmetic treatment). Understand associated insurances: critical illness, income protection, and personal accident. Distinguish PMI (reimbursement of treatment) from critical illness (lump sum on diagnosis) and income protection (replaces income).
Traps
Questions mix moratorium (conditions in a look-back period excluded until treatment-free period passes) with full medical underwriting (conditions assessed at outset). Watch for chronic conditions being excluded from PMI, and the difference between indemnity and cash plan benefits. Critical illness pays on diagnosis of a defined condition, not on inability to work.
Rule of thumb
PMI = pay the bills; CI = lump sum on defined illness; IP = replace income. Match the product to the need described in the question.
Worked example
A claimant is diagnosed with a covered cancer. A critical illness policy pays the full sum assured (e.g., £50,000) as a lump sum. A PMI policy would instead pay for eligible treatment costs. An income protection policy would pay a proportion of income if unable to work - each responds differently to the same event.