Strategies for reducing the cost of medical insurance

One of the issues I find with clients who are over the age of 50 is that as they make minor claims on their medical insurance policy over the life of the plan the premiums rise disproportionately due to the claims effect on the insurers no claims discount policy and in addition age increases and medical inflation effects can mean that with two or three years a plan that in year one is perfectly affordable can become eye-wateringly expensive in just 24 months.

I'm having this issue with 2 clients at the moment.

The problem is that with recent claims it isn't possible to move insurers and maintain full underwriting for the member. The options then are three fold :

1) remain where you are and pay the higher costs
2) remain but reduce benefits with the current insurer to reduce costs
3) move insurer, accept the increased underwriting but use the saving made monthly to self pay any conditions that are found to be excluded.

Option 3 seems like a bad idea and in many cases it is, especially if the conditions in question are serious. I would never recommend a move if the medical problem suffered were serious or life threatening even in potent. However, the premise of this thought exercise as per my opening remark is the effect of minor claims over time.

Assuming minor recent claims, look at the following pricing scenario (which whilst showing rounded premiums is indicative of real world pricing).

2011 premium : £ 195 per month

2012 renewal : £ 320 p.m.

2013 proposed premium : £ 530 per month

For this client we have decided together to move to a new plan that will impose a couple of minor new exclusions but the new premium will be around £ 250 per month - less than their renewal and over £ 280 per month less than the current insurer wanted moving forwards.

In essence, the £ 3,000 per annum we're now saving would more than cover any required treatment should the old (now excluded)medical conditions re-occur.

In one sense this example is quite extreme and most clients plans do not increase by this amount so quickly but there are as per the above cogent strategies we can put in place when this happens.