PMI for Family Businesses How to Cover Extended Family Staff
As an FCA-authorised broker that has helped arrange over 900,000 policies, WeCovr understands the unique challenges UK family businesses face. This guide explores your private medical insurance options for covering everyone, from directors to extended family members who are also part of your valued team.
Policy options for covering wider family and non-traditional employees
Family businesses are the backbone of the UK economy, but their unique structure can make standard business services, like health insurance, feel like a puzzle. You might have a spouse working part-time, a nephew helping out during the summer, or a semi-retired parent still contributing their invaluable experience.
Providing private medical insurance (PMI) is a powerful way to show you care, reduce sickness-related absence, and attract and retain talent. But how do you extend this benefit to a workforce that doesn't fit the traditional nine-to-five mould? This article will walk you through the options, complexities, and solutions.
Understanding the Challenge: Why is Insuring a Family Business Different?
Unlike a typical corporation with a clearly defined workforce, a family business often operates with a blend of formal and informal roles. This creates specific challenges when setting up a group health insurance plan:
- Diverse Employment Status: Your team might include full-time directors, part-time administrators, seasonal workers, and even consultants who are family members. Insurers have specific criteria for who qualifies as an 'employee'.
- Varying Age Groups: A family business can span generations, from a 19-year-old apprentice to a 70-year-old founder. Age is one of the biggest factors influencing PMI premiums.
- The Emotional Factor: The decision to provide health cover is not just a business transaction; it's a personal one. You're looking after the health of your loved ones, which adds weight and complexity to the process.
- Defining 'Dependents': On a personal policy, a 'dependent' is usually a spouse or child. In a business context, you can't simply add your sibling or parent as a dependent unless they are also a genuine employee.
Navigating these issues requires a clear understanding of how private medical insurance UK policies are structured.
The Golden Rule of UK PMI: Acute vs. Chronic Conditions
Before diving into policy types, it's vital to understand the fundamental principle of private medical insurance in the UK. This is the single most important concept to grasp.
PMI is designed to cover acute conditions that arise after your policy has started.
- An acute condition is a disease, illness, or injury that is likely to respond quickly to treatment and lead to a full recovery. Examples include a hernia, cataracts, joint pain requiring replacement, or appendicitis.
- A chronic condition is a disease, illness, or injury that has one or more of the following characteristics: it needs ongoing or long-term monitoring, requires palliative care, has no known 'cure', or is likely to come back. Examples include diabetes, asthma, arthritis, and high blood pressure.
Standard UK PMI policies DO NOT cover the treatment or management of chronic conditions. They also exclude pre-existing conditions—any ailment for which you have experienced symptoms, sought advice, or received treatment in the five years before your policy began.
This is why PMI is seen as complementary to the NHS, not a replacement. The NHS provides excellent care for chronic conditions and emergencies, while PMI offers you speed, choice, and comfort for eligible acute conditions.
Core PMI Policy Structures for Your Family Business
When it comes to insuring your team, you generally have two main routes to consider. The best choice will depend on the size and structure of your business.
1. Group Private Medical Insurance
A Group PMI scheme is a single policy that covers a group of employees, usually three or more. This is often the most cost-effective way to provide health cover.
- Benefits:
- Lower Cost Per Person: Insurers offer better rates for groups as the risk is spread across more people.
- Simpler Administration: One policy, one renewal date, and streamlined management.
- Better Underwriting Terms: For larger groups (often 20+ employees), you may gain access to 'Medical History Disregarded' underwriting, which can cover pre-existing conditions.
- Who Can Be Covered?
- The policy can cover directors and employees who are on the company's payroll and have a contract of employment.
- You can then add their direct dependents (spouses/partners and children) to their cover, often at an additional cost.
The key question for a family business is: Who qualifies as an employee? An insurer will typically define an employee as someone who is contracted to work a minimum number of hours per week (e.g., 15+) and is registered for PAYE. A family member simply "helping out" without a formal contract would not be eligible.
2. Multiple Individual or Family Policies
If your business is very small (e.g., just you and your partner) or your 'employees' are contractors, a group scheme might not be an option. In this case, the business could fund separate individual policies for each key person.
- Benefits:
- Total Flexibility: Each person can have a policy tailored to their specific needs and budget. A younger family member might want basic cover, while an older director may prefer a comprehensive plan.
- No Minimum Employee Number: You can set this up for just one person.
- Drawbacks:
- Higher Cost: Individual policies are typically more expensive per person than a group scheme.
- Stricter Underwriting: You won't have access to Medical History Disregarded underwriting. Each person will be assessed individually, either through a full medical questionnaire or a moratorium.
- More Administration: You will be managing multiple policies with different renewal dates and terms.
An expert PMI broker like WeCovr can be invaluable here. We can assess your unique business structure and advise on whether a group scheme or a series of individual policies would be more suitable and cost-effective, saving you time and money.
Covering Different Types of 'Family Staff': A Practical Guide
Let's break down how to approach insuring the different people who make your family business tick. Proving a genuine employment relationship is the key to including extended family on a business policy.
| Type of Person | Can They Join a Group PMI Scheme? | Key Considerations & Solutions |
|---|---|---|
| Director / Owner | Yes | This is the most straightforward. You are an employee of your own limited company. |
| Spouse/Partner (as an employee) | Yes | If your partner is a fellow director or a contracted employee on the payroll, they can be covered as an employee in their own right. |
| Spouse/Partner (not an employee) | Yes | They can be added as a dependent to your cover within the group scheme. |
| Children | Yes | Your children can be added as dependents, typically up to age 21, or 24 if they are in full-time education. |
| Parents, Siblings, Aunts, Uncles | Only if they are genuine employees | This is the crucial point. You cannot add a parent as a 'dependent'. They must have a formal contract of employment, be on the payroll, and be paying tax and NI. Insurers may ask for proof of this relationship. If they are not an employee, the business could fund a separate individual policy for them. |
| Part-Time Staff | Usually, yes | Most insurers require employees to work a minimum number of hours per week (e.g., 15-20) to be eligible for a group scheme. Check the insurer's specific rules. |
| Seasonal or Temporary Staff | Unlikely | Most group schemes are for permanent staff. It's difficult and often not cost-effective to add and remove people frequently. An individual short-term policy might be an option, but this is rare. |
| Freelancers / Consultants | No | Freelancers are self-employed and are not your employees. They cannot be included in your group scheme. The business could potentially pay for their separate, individual policy as part of their compensation package, but this has different tax implications. |
Choosing the Right Underwriting for Your Family Team
Underwriting is how an insurer assesses the risk of insuring someone. It determines what will and won't be covered.
-
Full Medical Underwriting (FMU):
- What it is: You complete a detailed health questionnaire for every person being insured.
- Pros: You know from day one exactly what is covered and what is excluded. There are no grey areas.
- Cons: The application process is longer. Pre-existing conditions will be explicitly excluded.
-
Moratorium Underwriting (MORI):
- What it is: The most common type for small groups and individuals. There is no initial medical questionnaire. Instead, the policy automatically excludes treatment for any condition you've had symptoms of or received treatment for in the 5 years before joining.
- The '2-Year Rule': If you then complete 2 continuous years on the policy without needing any treatment, consultation, or medication for that condition, it may become eligible for cover.
- Pros: Quick and easy to set up.
- Cons: Can create uncertainty. You may not know if a condition is covered until you need to make a claim.
-
Medical History Disregarded (MHD):
- What it is: The most comprehensive and expensive option. The insurer agrees to disregard previous medical history and cover eligible acute conditions, even if they are pre-existing.
- Pros: Provides complete peace of mind, especially for teams with a range of health histories.
- Cons: Usually only available to larger groups (e.g., 20+ members), although a specialist broker can sometimes negotiate this for smaller, growing businesses.
Tailoring Your Policy to Manage Costs
Private health cover doesn't have to be prohibitively expensive. You can adjust several elements of your policy to fit your budget. Think of them as levers you can pull to control the premium.
| Policy Feature | How It Affects Your Premium | Good for Family Businesses Who... |
|---|---|---|
| The Excess | A higher excess lowers your premium. | An excess is the amount each person pays towards a claim per year (e.g., £250). A higher excess signals to the insurer that you will only claim for more significant issues. |
| Level of Cover | Basic (in-patient only) cover is cheaper. Comprehensive cover is more expensive. | Want to primarily protect against the high cost of surgery and hospital stays, but are happy to pay for initial consultations themselves. |
| Out-patient Limit | Capping the value of out-patient services (scans, tests, consultations) lowers your premium. | A common option is to cap this at £500 or £1,000 per person per year. It still provides a significant safety net while reducing the cost. |
| Hospital List | Choosing a more restricted list of hospitals lowers your premium. | Are based outside of central London or are content with using a national network of excellent private hospitals rather than the most expensive facilities. |
| The Six-Week Wait Option | Adding this option lowers your premium significantly. | This means that if the NHS can provide the required in-patient treatment within six weeks of it being recommended, you will use the NHS. If the wait is longer, your private cover kicks in. It's a pragmatic way to use the best of both systems. |
More Than Just a Policy: Wellness and Added-Value Benefits
Modern private medical insurance is about more than just paying for treatment. The best PMI providers now include a host of benefits designed to keep your team healthy and productive. These are often included as standard.
- Digital GP Services: This is a game-changer. Get 24/7 access to a GP via phone or video call, often with same-day appointments. For a busy director or a parent with a sick child, this is incredibly valuable, saving time and worry.
- Mental Health Support: Most policies now offer a set number of counselling or CBT sessions, as well as confidential support helplines. Given that stress and mental health issues are a leading cause of long-term absence, this is a vital benefit.
- Health and Wellness Rewards: Some insurers, like Vitality, actively reward healthy behaviour. By tracking your activity, you can earn discounts on gym memberships, fitness trackers, and even healthy food.
- Expert Second Opinions: If a family member receives a serious diagnosis, many policies provide access to a world-leading expert to review their case and treatment plan.
As a WeCovr client, you also get complimentary access to our AI-powered nutrition app, CalorieHero, to help you and your team stay on top of your health goals. Furthermore, by taking out a PMI or Life Insurance policy through us, you can unlock discounts on other essential business and personal cover, creating a comprehensive protection package.
Tax Implications for Your Business and Family
It's important to understand the tax side of providing PMI.
- For the Business: The cost of the PMI premiums is generally considered an allowable business expense, meaning you can deduct it from your profits to reduce your Corporation Tax bill.
- For the Employee: The health insurance premium is treated as a Benefit in Kind (BIK). This means the value of the premium is added to the employee's income, and they will pay income tax on it.
- Example: If the annual premium for a director is £1,200 and they are a basic rate (20%) taxpayer, they will pay an extra £240 in tax per year (£1,200 x 20%).
- National Insurance: The business must also pay Class 1A National Insurance Contributions (NICs) on the value of the benefit provided to the employee. The current rate is 13.8% (for tax year 2024/25). In our example, the business would pay an extra £165.60 in NICs (£1,200 x 13.8%).
You must report this on a P11D form for each employee receiving the benefit. While it is a taxable benefit, for many, the value of fast access to private healthcare far outweighs the relatively small tax cost.
How to Choose the Best PMI Provider
The UK market is home to several excellent insurers, each with its own strengths:
- Bupa: One of the most recognised names, with a huge network and a strong focus on clinical excellence.
- AXA Health: Known for its comprehensive cover, excellent customer service, and strong mental health support.
- Aviva: A major UK insurer offering a wide range of customisable and often very competitive policies.
- Vitality: Unique for its focus on rewarding healthy living, which can be highly engaging for a proactive team.
- WPA: A not-for-profit insurer known for its flexible policies and high customer satisfaction, particularly popular with smaller businesses.
The "best" provider doesn't exist in a vacuum. The right choice for your family business depends entirely on your budget, the age and health of your team, and what you value most. This is where using a broker is essential. An independent broker works for you, not the insurer.
At WeCovr, we leverage our expertise and market knowledge to compare all the leading providers on your behalf. We understand the specific nuances of insuring family members and non-traditional staff, and we will present you with clear, jargon-free options that are tailored to your business. Our advice is completely free, and we are proud of the high satisfaction ratings we receive from our clients.
Can I add my elderly parents to my company PMI policy?
Is private medical insurance worth it for a small family business?
What is the difference between moratorium and full medical underwriting?
Do I have to offer private health cover to all my employees?
Protecting your family and your business is paramount. Private medical insurance is a powerful tool to achieve both. The options can seem complex, but the right advice makes the process simple.
Ready to find the right health cover for your family business? Get a free, no-obligation quote from WeCovr today and let our experts build a plan that works for you.
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.
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