What are the advantages and disadvantages of protecting your no claims discount


If you have a private medical insurance policy which operates using a no-claims discount (NCD) system, you may ask yourself whether it’s worth protecting it by paying more if the insurer offers this option.

The following points below will help you understand that advantages and disadvantages to protecting your no claims discount.

Advantages of protecting your NCD

No financial pressure not to claim – You’ve taken out private medical insurance for a reason, so that when you need medical treatment you can go privately. The last thing you want is to be deterred from making a claim due to the thought of financial implications.

Peace of mind – You know if you need to claim you will still have your discount next year and so your premium at renewal will have only increased due to medical inflation, insurance premium tax and age band increases. For some policyholders, the reduction of their no claims discount could make their insurance prohibitively expensive.

Good value – Protecting your no claims discount is generally relatively inexpensive.

Disadvantages of protecting your NCD

It won’t freeze your premiums – Many people have the false belief that if they take out a protected no claims discount their premiums will stay the same next year. Unfortunately as we age our risk increases and so do our premiums. Also medical fees and drugs get more expensive every year, so your insurer has to raise premiums to accommodate this.

Another additional expense – When times are tight the last thing policyholders need is an additional option which pushes up their premiums, however as mentioned above, where an insurer offers the additional protection of a NCD it is normally low cost.

Claiming may not impact your discount as much as you think – You may only drop a few discount levels if you make a claim, while this could reduce your discount by 5-10% this is often not as drastic as many policyholders think.

Whether you are looking at purchasing a policy or already have one in place, SMP Healthcare Ltd can help you discuss the possibility of adding NCD protection to your private medical insurance policy. Simply contact us on 01245 929129 or email enquires@smphealthcare.com.