Case study

Gordon, 58, wishes to take out a private medical insurance (PMI) policy. He is in generally good health but works in an extremely stressful position as a highly paid civil servant. However, due to the recession, he will probably find himself retiring within the next year or two with a generous pension. What issues should he be looking at?

Richard Blacker, UK Independent

PMI is a lifetime commitment, so therefore it should be budgeted into Gordon's retirement fund. With average annual increases for age and inflation running at about 12%, premiums will double every six to seven years, so it is vital to look at policies that can be altered later in life if premiums become too expensive. Some policies will offer attractive no claims discounts at the outset, but Gordon should work out the base premium without this as eventually he will use the policy, and it will be lost.

Some companies offer policies with no annual age increases but Gordon should check what the previous five years inflationary increases have been before start-ing any policy.

Assuming Gordon lives in central London, wants comprehensive cover, and access to all London hos-pitals, I would recommend Bupa Care scale C with 44% discount (not claims related) for Civil Servants, at a monthly premium of £91.88 (£100 excess or £80.97 with £250 excess per annum). The discount would drop to 25% once he is over 65 and makes a claim.

If he is looking to keep his premiums low, he could opt for Bupa Client Choice Essential (£0 excess) at a premium of £56.53, including a 20% no claims discount. Gordon would be responsible for all pre-admission outpatient consultations on this policy but all diagnostic tests and inpatient treatment would be fully covered. Should he require treatment for cancer, he would have unlimited cover for outpatient consultations.

Rebecca Freebody, Norwich Union Healthcare

There are several things for Gordon to consider when deciding which policy he should take out. Primarily, it would be worth contemplating a flexible plan in case his needs should change following his retirement.

Norwich Union Healthcare's Health Solutions policy offers Gordon the flexibility to pick and choose benefits to meet his needs and budget. For those of retirement age, claims are likely to increase and so outpatient care would definitely be worth considering to cover situations such as specialist appointments and diagnostic tests. Our claims data shows that there is an increased risk of cancer or heart disease in this age group so it will be important that Gordon has access to prompt diagnosis.

Our policy also includes benefits which will help Gordon lead a healthier lifestyle such as information on stress management. Gordon will also receive a leisure club membership discount. It may be beneficial for him to consider a health screen to high-light areas where he could make small improvements to his lifestyle to enhance his health and outlook.

He would also have the choice to supplement the policy to include additional benefits such as physiotherapy or access to a chiropractor to ensure he maintains his good health.

A way that Gordon could manage his premiums would be to consider a policy with a high excess. There is the option of a £500 or £1,000 excess which could substantially reduce his monthly payments.

Jon Smith, Bupa UK Health Insurance

There are a few options that would be suitable for Gordon. As he is in good health, now would be a great time for him to take out a full medically underwritten private medical insurance (PMI) policy because it is unlikely that any pre-existing conditions would be excluded from his cover.

As an employed civil servant, he would also benefit from a 44% discount off our comprehensive Bupacare scheme. This would cover Gordon for all diagnostic tests and outpatient, inpatient and day-case-treatment from around £92 per month, if he chose to have a £100 excess. Even after the age of 65, being in receipt of a civil service pension would mean that Gordon would continue to receive a 25% discount.

Alternatively, Gordon may want to consider a policy which rewards his good health and offers a no claims discount - such as Bupa's Clientchoice products which include a choice of three levels of cover. Gordon would be eligible for a 20% no claims discount in his first year and could join on a moratorium basis. If he took out the top level of cover, Clientchoice Plus at around £92 per month, he would feel assured that all his diagnostic tests and outpatient and inpatient or day-case-treatment would be covered. However, if Gordon is concerned about his tightening budget once he is retired, he could opt for Clientchoice Essential at around £57 per month, which would give him the peace of mind that his larger costs of medical treatment would be paid for - such as diagnostics and inpatient or day-case-treatment.