More and more people are cancelling important private medical insurance (PMI) policies due to ongoing financial pressures, financial experts claim.
They believe it is due to people and businesses tightening their belts as the UK economy struggles, with many firms putting hiring on hold due to tax rises.
David Stirling, Independent Financial Adviser at Belfast-based Mint Wealth Ltd, said: “There has been a notable uptick in PMI policy cancellations this year following the fiscal assault on the business community.
“Tax hikes, spiralling costs, stubborn inflation and economic uncertainty are seeing more and more businesses and households axe their PMI policies.
“Companies are being forced to penny-pinch and re-evaluate their outgoings. Because it’s not cheap, PMI is now back on the nice-to-have rather than must-have list and is the first thing many firms and households look at.
“Sadly these policies can be life-saving and policyholders should know that, rather than cancel outright, they can reduce the cost by adding an excess or limiting the cover.”
Dariusz Karpowicz, Director at Doncaster-based Albion Financial Advice, agreed that the economy is to blame.
He said: “PMI cancellations are definitely picking up steam this year, and frankly, who can blame people and businesses when they’re being hammered from all sides?
“Due to National Insurance hikes, high inflation and general economic uncertainty, companies are scrutinising every line item, and PMI often gets the chop first.
“The irony is painful, though. Just when NHS waiting lists are at their worst and we need private cover most, businesses are forced to bin it because the coffers are empty. What was once considered essential during Covid has shifted back to ‘luxury’ status.
“Before you cancel outright, consider tweaking your policy instead, such as raising the excess or reducing the cover. This can slash costs while at least keeping some protection in place.”
Justin Moy, Managing Director at Chelmsford-based EHF Mortgages, said PMI had moved from a necessity to a luxury.
He continued: “The popularity of PMI does seem to have dwindled recently, with companies having to rethink their benefit packages given increased NI and other employment costs. Consumers are also having to tighten their belts again with inflation remaining stubbornly high and interest rates also elevated.
“Medical insurance has gone from a near-necessity to a ‘nice to have’, as we all prioritise the spiralling costs of business and home life. With the Autumn Budget looming, more businesses and households could be forced to cut this critical cover.”
Eamonn Prendergast, Chartered Financial Adviser at Bromley-based Palantir Financial Planning Ltd, said PMI gets more expensive as people age.
He added: “PMI is one of those policies people often reassess when finances tighten. Unlike life insurance which typically has a fixed term or lifelong cover, PMI is annual and recalculated each year. As we age, the likelihood of claiming increases, and so do the premiums.
“It’s therefore not surprising to see more clients reconsidering or cancelling, particularly as costs have risen sharply post-Covid.”
Scott Gallacher, Director at Leicester-based Rowley Turton, cautioned people against making rash decisions.
He added: “PMI can certainly appear relatively expensive, and with increased pressures on businesses – such as higher National Insurance contributions – I’m not surprised to hear of some companies looking to cut costs by cancelling their private medical insurance. However, I’d urge caution.
“The potential benefits of PMI are significant, especially with the NHS still struggling and likely to come under even greater financial pressure given the state of the government’s finances.
“On a personal note, I was once able to access prompt treatment through PMI that wasn’t available under the NHS – treatment that might well have made the difference between losing my hearing and not.
“And clients have shared similar experiences: one told me their loved one received specialist cancer treatment via their employer’s PMI, adding years to their life and giving their young children the chance to truly know and remember them. If cost is still an issue, speak to a specialist broker about your options.”
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