Health Insurance for Limited Company Directors
As an FCA-authorised private medical insurance broker in the UK, WeCovr has helped arrange over 900,000 policies, giving us unparalleled insight into protecting what matters most. This guide explains the significant tax benefits and extensive cover options available to limited company directors, ensuring you make an informed choice.
WeCovr explains tax benefits and cover options for company directors
Running a limited company is demanding. You are the driving force, the key decision-maker, and often the person everyone relies on. Your health isn't just a personal matter; it's fundamental to the stability and success of your business. An unexpected illness or injury could mean delayed projects, lost revenue, and significant operational stress.
This is where private medical insurance (PMI) becomes a powerful tool, not just for your health, but as a strategic business asset. It provides a vital safety net, ensuring you can bypass lengthy NHS queues and get back to work swiftly. In this comprehensive guide, we'll break down everything you need to know about setting up health insurance through your limited company, from the compelling tax advantages to choosing the right level of cover for your needs.
Why is Private Health Insurance a Smart Move for Directors?
For a company director, time is money. Long periods of illness or waiting for treatment can have a direct and damaging impact on your business's bottom line. While the NHS provides excellent care, it is currently facing unprecedented pressure.
According to the latest data from NHS England, the referral-to-treatment (RTT) waiting list remains at a record high, with millions of people waiting for routine procedures. The median waiting time can be several months, a delay that most businesses simply cannot afford their key personnel to endure.
Key benefits of Private Medical Insurance for a director include:
- Speedy Access to Treatment: Bypass long waiting lists for consultations, diagnostic scans (like MRI and CT), and surgery. This is the primary reason most directors opt for private cover.
- Choice and Control: You can often choose your specialist, surgeon, and the hospital where you receive treatment, giving you greater control over your healthcare journey.
- Comfort and Privacy: Treatment is typically provided in a private, en-suite room, offering a more comfortable and restful environment for recovery.
- Access to Specialist Drugs and Treatments: PMI policies can provide funding for new or experimental drugs and treatments that may not be available on the NHS due to cost or licensing.
- Peace of Mind: Knowing you have a plan in place to deal with health issues quickly and effectively reduces stress, allowing you to focus on running your business.
The Game Changer: How Company Health Insurance Is Tax-Efficient
This is where arranging health insurance through your limited company becomes incredibly attractive. Unlike a personal policy paid for from your own pocket, a business policy offers significant tax advantages.
When your limited company pays for your health insurance premium, it is treated as an allowable business expense. This means the full cost of the policy can be deducted from your company's pre-tax profits, reducing its Corporation Tax liability.
However, it's important to understand that HMRC considers this a 'Benefit in Kind' (BIK). This means you, as the director, will have to pay personal income tax on the value of the premium. Your company will also need to pay Class 1A National Insurance Contributions (NICs) on the same amount.
Let's break this down with a clear example.
Scenario:
- Director: Sarah, a 40% higher-rate taxpayer.
- Company: Profitable, paying 25% Corporation Tax.
- Annual PMI Premium: £1,500.
Option 1: The Company Pays for the Policy
- Corporation Tax Saving (for the Company):
- The £1,500 premium is a business expense.
- Corporation Tax saving: £1,500 x 25% = £375.
- Employer's National Insurance (paid by the Company):
- The company pays Class 1A NICs on the benefit.
- Cost: £1,500 x 13.8% = £207.
- Income Tax (paid by the Director):
- Sarah pays income tax on the £1,500 benefit.
- Cost: £1,500 x 40% = £600.
Total Cost Breakdown (Company Policy):
- Company Net Cost: £1,500 (premium) - £375 (tax saving) + £207 (NICs) = £1,332
- Director's Personal Cost: £600
- Total Combined Cost: £1,932
Option 2: The Director Pays Personally
To pay a £1,500 premium personally, Sarah first needs to take £1,500 out of the company. Let's assume she takes it as a dividend.
- Extracting the Funds:
- To have £1,500 in her hand after tax, she needs to draw a larger amount from the company. A £1,500 dividend for a higher-rate taxpayer (taxed at 33.75%) means she would need to declare a dividend of roughly £2,264.
- Dividend Tax: £2,264 x 33.75% = £764 (This leaves her with £1,500).
- Corporation Tax (already paid):
- Before this £2,264 could be paid as a dividend, the company had to make that profit and pay Corporation Tax on it.
- Profit needed to pay £2,264 dividend: £2,264 / (1 - 0.25) = £3,018.
- Corporation Tax paid: £3,018 x 25% = £754.
Total Cost Breakdown (Personal Policy):
- To get £1,500 in her pocket to pay the premium, the company needed to generate £3,018 of profit. The total 'cost' to the business and director combined is this full amount.
Comparison Summary:
| Metric | Paid by Limited Company | Paid Personally (from Dividends) |
|---|---|---|
| Gross Cost to Business | £1,500 (premium) + £207 (NICs) | £3,018 (gross profit needed) |
| Director's Tax | £600 (Income Tax) | £764 (Dividend Tax) |
| Total Effective Cost | £1,932 | £3,018 |
| Total Saving with a Company Policy | £1,086 |
As you can see, even after accounting for the Benefit in Kind taxes, arranging health insurance through the limited company is substantially more tax-efficient. An expert PMI broker like WeCovr can guide you through this, ensuring your policy is set up correctly to maximise these benefits.
What Does Private Health Insurance for Directors Cover?
A private medical insurance policy is built in layers. You start with a core level of cover and then add optional extras to tailor the plan to your specific needs and budget.
Core Cover: In-patient and Day-patient Treatment
This is the foundation of almost every private health insurance policy in the UK.
- In-patient Cover: Covers you for treatment that requires a stay in a hospital bed overnight or longer. This includes surgery, accommodation, nursing care, and specialist fees.
- Day-patient Cover: Covers you for procedures where you are admitted to a hospital or clinic and occupy a bed for the day but do not stay overnight.
Core cover almost always includes comprehensive cancer care, which is a significant reason many people take out PMI. This often includes surgery, radiotherapy, chemotherapy, and ongoing monitoring.
Key Optional Add-on: Out-patient Cover
This is one of the most important options to consider as it covers the diagnostic stage of your treatment.
- Out-patient Cover Includes:
- Specialist Consultations: Seeing a consultant to diagnose your condition.
- Diagnostic Tests: Scans like MRI, CT, and PET, as well as X-rays and blood tests.
- Minor Procedures: Small procedures that don't require a hospital bed.
Insurers typically offer different levels of out-patient cover, for example:
- Basic: Up to £500 per year.
- Standard: Up to £1,000 or £1,500 per year.
- Comprehensive: Unlimited out-patient cover.
Choosing a lower level of out-patient cover is a common way to reduce your premium, but it means you may have to pay for some diagnostic tests yourself.
Other Popular Optional Extras
- Therapies Cover: Pays for a set number of sessions with a physiotherapist, osteopath, or chiropractor. Essential for musculoskeletal issues like back pain or sports injuries.
- Mental Health Cover: Provides access to counsellors, therapists, and psychiatrists. With the pressures of running a business, this is an increasingly valuable benefit.
- Dental & Optical Cover: Contributes towards the cost of routine check-ups, dental treatment, and new glasses or contact lenses.
- Travel Cover: Some insurers allow you to add European or Worldwide travel insurance to your health policy.
Critical Information: What Is NOT Covered by PMI?
It is vital to understand the limitations of private medical insurance. These policies are designed for a specific purpose, and being aware of the exclusions prevents disappointment at the point of a claim.
The Golden Rule: Standard UK private medical insurance is designed to cover acute conditions that arise after you take out the policy.
- Acute Condition: A disease, illness, or injury that is likely to respond quickly to treatment and lead to a full recovery (e.g., joint replacement, cataract surgery, hernia repair).
- Chronic Condition: A condition that is long-lasting and often has no known cure. It can be managed but not fixed (e.g., diabetes, asthma, high blood pressure, arthritis). PMI does not cover the routine management of chronic conditions.
- Pre-existing Conditions: Any illness or injury for which you have experienced symptoms, received medication, or sought advice in the years leading up to your policy start date (usually the last 5 years). These will be excluded from cover, at least initially.
Other common exclusions include:
- Routine pregnancy and childbirth
- Cosmetic surgery (unless for reconstructive purposes after an accident)
- Self-inflicted injuries
- Treatment for drug or alcohol abuse
- Emergency treatment (A&E visits are always handled by the NHS)
Choosing Your Underwriting: The Key to Your Cover
When you apply for a policy, the insurer needs to know how to handle your previous medical history. This is done through underwriting. There are two main types.
| Underwriting Type | How It Works | Pros | Cons |
|---|---|---|---|
| Moratorium (Mori) | You don't declare your full medical history upfront. The policy automatically excludes any condition you've had in the last 5 years. | Quick and easy to set up. No medical forms needed. | You may not know exactly what's covered until you claim. |
| Full Medical Underwriting (FMU) | You complete a detailed health questionnaire. The insurer reviews your history and lists specific, permanent exclusions on your policy from day one. | Complete clarity from the start. You know exactly what is and isn't covered. | The application process takes longer and can be more intrusive. |
Which is right for you?
- Moratorium is popular for its simplicity. An exclusion on a pre-existing condition can be lifted if you go for two continuous years on the policy without seeking any treatment, advice, or medication for it.
- FMU is better for those who want absolute certainty and don't mind the upfront administration.
An independent broker can help you decide which underwriting method best suits your personal circumstances.
How to Reduce the Cost of Your Director's Health Insurance
While PMI is a valuable investment, you still want to ensure you're getting the best possible value. Here are the most effective ways to manage your premium:
- Increase Your Excess: An excess is a fixed amount you agree to pay towards the cost of a claim each year. A typical excess might be £100, £250, or £500. Choosing a higher excess will directly lower your monthly or annual premium.
- Select a Guided Hospital List: Insurers have different lists of hospitals where you can receive treatment. A comprehensive national list including prime central London hospitals will be the most expensive. Opting for a more limited list of local, high-quality private hospitals can offer significant savings.
- Choose the '6-Week Wait' Option: This is a very popular cost-saving measure. With this option, if the NHS can provide the in-patient treatment you need within six weeks of when it's recommended, you use the NHS. If the waiting list is longer than six weeks, your private policy kicks in. This can reduce your premium by 20-30%.
- Review Optional Extras: Be realistic about the cover you need. If you don't have a history of back problems, you might forego therapies cover. If you already have good dental cover through another source, don't pay for it twice.
- Speak to an Expert Broker: This is the single most effective step. A specialist PMI broker like WeCovr has access to the whole market. We can compare policies from all the leading providers, explain the nuances of each, and find the perfect balance of cover and cost for you. Our service is free to you, as we are paid by the insurer you choose.
A Holistic Approach to Wellbeing: More Than Just Insurance
At WeCovr, we believe that true health protection goes beyond just paying for treatment. It's about fostering a proactive and healthy lifestyle to minimise the risk of needing to claim in the first place. As a busy director, managing stress and prioritising your physical health is paramount.
- Nutrition: A balanced diet is fuel for your brain and body. Avoid relying on caffeine and sugar for energy.
- Exercise: Even 30 minutes of moderate activity per day can drastically improve your cardiovascular health, reduce stress, and boost your mood.
- Sleep: Aim for 7-8 hours of quality sleep per night. It's essential for cognitive function, decision-making, and emotional regulation.
To support our clients on their wellness journey, WeCovr provides complimentary access to CalorieHero, our cutting-edge AI-powered calorie and nutrition tracking app. Furthermore, clients who purchase PMI or Life Insurance with us are eligible for exclusive discounts on other policies, helping you build a comprehensive protection portfolio for you and your business.
A Look at the Leading UK PMI Providers
The UK market is home to several outstanding health insurance providers, each with its own unique strengths.
| Provider | Key Feature / Focus | Common Optional Add-ons |
|---|---|---|
| Bupa | One of the most recognised names in UK healthcare, with a vast network and strong brand reputation. | Extensive mental health support, dental and optical plans. |
| AXA Health | Known for its flexible policies and excellent customer service. Often provides access to a 24/7 health support line. | Guided consultant access (Expert Select), comprehensive therapies cover. |
| Aviva | A major UK insurer offering robust, comprehensive policies with a strong focus on cancer care and digital GP services. | '6-Week Wait' option is prominently featured, extensive hospital lists. |
| Vitality | Unique in the market, Vitality actively rewards you for living a healthy lifestyle with discounts and perks from partners like Apple and Waitrose. | Rewards programme is integral, but cover is still comprehensive. |
This table is for illustrative purposes only. The best PMI provider for you depends entirely on your individual needs, location, and budget.
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Does private medical insurance in the UK cover pre-existing conditions?
Take the Next Step to Protect Your Health and Your Business
Choosing the right health insurance is one of the most important decisions you can make as a limited company director. It's a tax-efficient way to protect your health, your income, and the continuity of the business you've worked so hard to build.
The market is complex, but you don't have to navigate it alone. Our expert advisers at WeCovr are here to help. We'll take the time to understand your unique needs and search the entire market to find a policy that delivers the best cover at the right price.
Ready to get started? Get your FREE, no-obligation quote from WeCovr today and discover how affordable peace of mind can be.
Related guides
Why private medical insurance and how does it work?
What is Private Medical Insurance?
Private medical insurance (PMI) is a type of health insurance that provides access to private healthcare services in the UK. It covers the cost of private medical treatment, allowing you to bypass NHS waiting lists and receive faster, more convenient care.How does it work?
Private medical insurance works by paying for your private healthcare costs. When you need treatment, you can choose to go private and your insurance will cover the costs, subject to your policy terms and conditions. This can include:• Private consultations with specialists
• Private hospital treatment and surgery
• Diagnostic tests and scans
• Physiotherapy and rehabilitation
• Mental health treatment
Your premium depends on factors like your age, health, occupation, and the level of cover you choose. Most policies offer different levels of cover, from basic to comprehensive, allowing you to tailor the policy to your needs and budget.
Questions to ask yourself regarding private medical insurance
Just ask yourself:👉 Are you concerned about NHS waiting times for treatment?
👉 Would you prefer to choose your own consultant and hospital?
👉 Do you want faster access to diagnostic tests and scans?
👉 Would you like private hospital accommodation and better food?
👉 Do you want to avoid the stress of NHS waiting lists?
Many people don't realise that private medical insurance is more affordable than they think, especially when you consider the value of faster treatment and better facilities. A great insurance policy can provide peace of mind and ensure you receive the care you need when you need it.
Benefits offered by private medical insurance
Private medical insurance provides numerous benefits that can significantly improve your healthcare experience and outcomes:Faster Access to Treatment
One of the biggest advantages is avoiding NHS waiting lists. While the NHS provides excellent care, waiting times can be lengthy. With private medical insurance, you can often receive treatment within days or weeks rather than months.
Choice of Consultant and Hospital
You can choose your preferred consultant and hospital, giving you more control over your healthcare journey. This is particularly important for complex treatments where you want a specific specialist.
Better Facilities and Accommodation
Private hospitals typically offer superior facilities, including private rooms, better food, and more comfortable surroundings. This can make your recovery more pleasant and potentially faster.
Advanced Treatments
Private medical insurance often covers treatments and medications not available on the NHS, giving you access to the latest medical advances and technologies.
Mental Health Support
Many policies include comprehensive mental health coverage, providing faster access to therapy and psychiatric care when needed.
Tax Benefits for Business Owners
If you're self-employed or a business owner, private medical insurance premiums can be tax-deductible, making it a cost-effective way to protect your health and your business.
Peace of Mind
Knowing you have access to private healthcare when you need it provides invaluable peace of mind, especially for those with ongoing health conditions or concerns about NHS capacity.
Private medical insurance is particularly valuable for those who want to take control of their healthcare journey and ensure they receive the best possible treatment when they need it most.
Important Fact!
We can look at a more suitable option mid-term!
Why is it important to get private medical insurance early?
👉 Many people are very thankful that they had their private medical insurance cover in place before running into some serious health issues. Private medical insurance is as important as life insurance for protecting your family's finances.👉 We insure our cars, houses, and even our phones! Yet our health is the most precious thing we have.
Easily one of the most important insurance purchases an individual or family can make in their lifetime, the decision to buy private medical insurance can be made much simpler with the help of FCA-authorised advisers. They are the specialists who do the searching and analysis helping people choose between various types of private medical insurance policies available in the market, including different levels of cover and policy types most suitable to the client's individual circumstances.
It certainly won't do any harm if you speak with one of our experienced insurance experts who are passionate about advising people on financial matters related to private medical insurance and are keen to provide you with a free consultation.
You can discuss with them in detail what affordable private medical insurance plan for the necessary peace of mind they would recommend! WeCovr works with some of the best advisers in the market.
By tapping the button below, you can book a free call with them in less than 30 seconds right now:
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WeCovr is an insurance specialist for people valuing their peace of mind and a great service.👍 WeCovr will help you get your private medical insurance, life insurance, critical illness insurance and others in no time thanks to our wonderful super-friendly experts ready to assist you every step of the way.
Just a quick and simple form and an easy conversation with one of our experts and your valuable insurance policy is in place for that needed peace of mind!