The price of expat health insurance can vary dramatically. Here are some reasons why.
The cost of health insurance differs depending on where you are, and what benefits you require.
9:44AM BST 18 Apr 2012
Pretend you are looking to buy a smart dining table and set of chairs. One furniture store meets your needs at a cost of £5,300. Another charges nearly £13,000 for an apparently similar collection.
Most people buy the first and save £7,700. In fact, they might well wonder how the expensive shop could ever stay in business.
Parallels are possible here between fictional furniture stores and the real world of international medical insurance companies – in the sense that premiums can vary two-and-a-half times for apparently similar cover for the same individual.
Any business that ignores market forces does so at its peril. And while you might think an insurer charging more than twice the going rate is heading to the same fate, that is not necessarily so.
A table of benefits and premiums for an early retired couple in Europe shows Axa PPP International charging £5,311 a year for its Comprehensive plan, covering in-patient and out-patient treatment.
But nothing is quite as it seems. The Axa PPP plan has an overall annual cap of £3,000 on out-patient procedures. That includes potentially expensive items such as specialist consultation and diagnostics. There is no limit on the Expacare plan.
However, that hardly accounts for such a large disparity in premiums for the couple (aged 60 and 58). According to insurance adviser Hazel Gregory, a Europe-based couple insured with Expacare would be taking a hit because the company divides the world in two for premium-setting purposes. Put crudely, inexpensive Europe is bundled into expensive Asia.
“ExpaCare has only two-area cover – Worldwide and Worldwide excluding US,” said Ms Gregory, managing director of Medical Insurance Services in Chandler’s Ford, Hampshire.
Asia includes high-cost centres such as Singapore and Beijing and includes vast areas where suitable medical care is nonexistent. That makes emergency air evacuation difficult to organise and expensive, while the patients often end up in the costly centres of medical excellence such as Singapore.
“Axa PPP treats Europe as a separate entity, which keeps the price down while other insurers – InterGlobal and Bupa – go further, making Africa a single area and the cheapest.”
Ms Gregory added: “The absence of any cap on the Expacare plan is an advantage because consultations and diagnostics can quickly mount up. For scans in UK you are looking at about £500 but they should be cheaper in France and Spain. Another reason behind the premium differential is that Expacare tends to concentrate on the corporate market, while Axa PPP goes across the board. But you should remember that no plans are alike – you just cannot make a direct comparison.”
Insurers throw in some peripheral benefits. The latest example is a “dormancy option” from Allianz Worldwide Care.
This allows policyholders to freeze their own personally funded health cover if they become eligible for an employer-funded plan. They will be taken back into cover without new underwriting. That is valuable for the person who develops a chronic condition, such as heart trouble, diabetes or asthma.
Clearly, as people move jobs and are posted abroad, the innovation will appeal. The problem is that Allianz is charging 30 per cent of the full annual premium for each year of dormancy.
This article was originally published in The Telegraph Weekly World Edition