Private Medical Insurance & Associated Insurances
Core concepts
PMI reimburses eligible private medical treatment costs. Candidates must understand underwriting approaches (full medical underwriting, moratorium, medical history disregarded), excess, co-insurance, waiting periods, pre-existing conditions, chronic vs. acute conditions, and exclusions (cosmetic, routine pregnancy, chronic care).
Associated covers include critical illness (lump sum on diagnosis of a defined condition), income protection/permanent health insurance (replaces income during incapacity, often deferred), and personal accident. Know sum insured, deferred period, benefit period, and definition of incapacity (own occupation vs. any occupation).
Traps in questions
- Confusing PMI (reimburses treatment costs) with critical illness (lump sum on diagnosis) and income protection (replaces income).
- Assuming moratorium underwriting covers all pre-existing conditions after a waiting period - usually only if treatment-free for a defined period.
- Forgetting chronic conditions are typically excluded from PMI.
- Mixing own occupation and any occupation definitions - the former is more favourable to the claimant.
- Overlooking deferred periods (time before income benefit starts) and benefit periods (how long it pays).
Worked example / rule of thumb
Income protection: insured income 40,000, benefit 60% of income, deferred period 13 weeks, benefit period to age 65. If incapacity lasts 6 months, benefit ≈ 40,000 × 0.60 × (months beyond deferral ÷ 12).
Rule of thumb: PMI pays providers; CI pays a lump sum; IP replaces income. Always check the definition of incapacity and the deferred period before calculating a payout.