DIY Combining High Excess With Savings
As an FCA-authorised broker that has arranged over 800,000 policies, WeCovr helps UK residents understand private medical insurance. This guide explores a savvy cost-saving strategy: combining a high policy excess with personal savings for minor treatments, an approach famously championed by Martin Lewis to make PMI more affordable.
Martin Lewis recommends setting a higher policy excess and keeping your own savings for minor treatments. A high excess plus personal savings can keep premiums down. — MoneySavingExpert
This simple yet powerful idea is about changing how you think about private health cover. Instead of using insurance for every minor issue, you use it as a safety net for significant, expensive health problems. For smaller costs, you "self-insure" using a dedicated savings pot.
This strategy can dramatically lower your monthly private medical insurance UK premiums, making comprehensive cover accessible to more people. Let's break down how it works and whether it's the right choice for you.
Understanding Policy Excess: The Foundation of This Strategy
Before we dive deeper, it's essential to understand what a policy excess is.
An excess (sometimes called a deductible) is a fixed amount of money you agree to pay towards the cost of your treatment when you make a claim on your insurance policy. The insurer then pays the remaining balance, up to your policy limits.
For example:
- Your policy has a £500 excess.
- You need a procedure that costs £3,000.
- You pay the first £500 directly to the hospital or specialist.
- Your insurer pays the remaining £2,500.
You typically only pay the excess once per policy year, even if you make multiple claims for different conditions. However, some policies apply the excess per claim, so it's vital to check your policy documents. An expert PMI broker can clarify this for you.
How the "High Excess, High Savings" Model Works in Practice
The logic is straightforward: the higher the excess you choose, the lower your monthly premium will be. By taking on more of the initial financial risk, you are signalling to the insurer that you are less likely to claim for small, inexpensive treatments. In return, they reward you with a cheaper policy.
Here is the step-by-step process:
-
Choose a High Excess: When setting up your private medical insurance, you opt for a higher excess than the standard £0 or £100. This could be £500, £1,000, or even more. This single decision immediately reduces your monthly premium.
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Calculate Your Savings: Work out the difference between the premium for a low-excess policy and your chosen high-excess policy. For instance, if a £100 excess policy is £80 per month and a £1,000 excess policy is £50 per month, you are saving £30 every month.
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Build a "Health Savings Pot": You redirect those monthly savings (£30 in our example) into a separate, easy-access savings account. This is your dedicated fund for minor medical expenses.
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Self-Fund Minor Treatments: If you need a few physiotherapy sessions or an initial consultation that costs less than your excess, you pay for it directly from your health savings pot. You don't make a claim on your insurance.
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Use PMI for Major Events: Your private health cover acts as your crucial safety net for serious and costly medical events, such as surgery, cancer treatment, or extensive diagnostic tests that would far exceed your excess.
The Numbers: A Real-Life Example
Let's imagine Sarah, a 40-year-old non-smoker, is looking for a comprehensive PMI policy. She gets quotes with different excess levels.
| Excess Level | Estimated Monthly Premium | Annual Premium | Annual Premium Saving (vs. £0 Excess) |
|---|---|---|---|
| £0 | £95 | £1,140 | £0 |
| £250 | £82 | £984 | £156 |
| £500 | £70 | £840 | £300 |
| £1,000 | £55 | £660 | £480 |
By choosing the £1,000 excess option, Sarah saves £480 per year on her premiums compared to the zero-excess policy.
She puts this £480 into an easy-access savings account.
- Scenario 1: Good Health Year. Sarah doesn't need any treatment. She has her PMI for peace of mind and has also saved £480.
- Scenario 2: Minor Issue. Sarah develops shoulder pain. She sees a private GP (£100) and is referred for four physiotherapy sessions (£60 per session = £240). The total cost is £340. She pays this from her £480 savings pot and still has £140 left over. She doesn't need to claim on her insurance.
- Scenario 3: Major Issue. Sarah is diagnosed with a condition requiring an MRI scan (£700) and subsequent surgery (£8,000). The total cost is £8,700. She uses her £480 savings plus an additional £520 to pay the £1,000 excess. Her insurer covers the remaining £7,700. Without insurance, she would have faced a bill she couldn't afford.
In all scenarios, Sarah is better off financially and has the security of knowing she is covered for significant health shocks.
Pros and Cons of This DIY Health Funding Approach
This strategy is smart, but it's not a one-size-fits-all solution. It's crucial to weigh the advantages and disadvantages for your personal situation.
| Pros (Advantages) | Cons (Disadvantages) |
|---|---|
| ✅ Lower Monthly Premiums: The most significant benefit. Makes private cover much more affordable. | ❌ Discipline Required: You must be disciplined enough to save the money you're not spending on premiums. |
| ✅ Reduces Frivolous Claims: You are less likely to claim for minor issues, which can help keep future premiums down. | ❌ Risk of Early Claim: If you need to claim early in your policy year, you may not have saved enough to cover the full excess. |
| ✅ Greater Control & Flexibility: You choose where to spend your savings, perhaps on treatments not covered by your PMI. | ❌ Potential for Large Outlay: You must be prepared to pay the full excess amount in one go if a major claim arises. |
| ✅ Builds a Savings Habit: Earmarking funds for health encourages good financial planning. | ❌ Not for Tight Budgets: If you have no room for savings, a low-excess policy might offer more predictable costs. |
| ✅ Cost-Effective in the Long Run: Over many years of good health, your savings pot can grow substantially. | ❌ Complexity: It adds a layer of personal financial management that some may find burdensome. |
Who Is This High-Excess Strategy Best Suited For?
This approach works brilliantly for certain individuals but may be less suitable for others.
This strategy is ideal for you if:
- You are a disciplined saver: You can trust yourself to put the premium savings aside each month without fail.
- You are in good general health: You are less likely to need frequent, small-scale treatments, giving your savings pot time to grow.
- You have emergency funds: You have other savings you could dip into to cover the excess if a claim arises before your health pot is fully funded.
- You want PMI mainly for "the big stuff": Your primary concern is covering the high costs of surgery, cancer care, or serious illnesses, not minor ailments.
- You are financially savvy: You understand the trade-off and are comfortable managing this small element of risk yourself.
You might want to reconsider if:
- You struggle to save money consistently.
- You have a limited disposable income and couldn't afford the large, one-off excess payment.
- You prefer the simplicity and predictability of knowing your insurer will cover costs from the outset (after a small or zero excess).
A Critical Reminder: What UK Private Medical Insurance Does Not Cover
It is absolutely vital to understand the fundamental purpose of standard UK private medical insurance. It is designed to cover acute conditions that arise after your policy begins.
- An acute condition is a disease, illness, or injury that is likely to respond quickly to treatment and lead to a full recovery (e.g., a hernia, cataracts, joint pain needing replacement).
PMI is not designed to cover:
- Pre-existing Conditions: Any medical condition you had symptoms of, received advice for, or were treated for before you took out the policy. Some insurers may cover them after a set period (usually two years) without symptoms or treatment, but this varies.
- Chronic Conditions: Illnesses that cannot be cured and require long-term management, rather than a short-term fix. This includes conditions like diabetes, asthma, high blood pressure, and arthritis. While PMI might cover the initial diagnosis of a chronic condition, it will not typically cover the ongoing, day-to-day management, which remains with the NHS.
Understanding this distinction is key to having the right expectations for your private health cover.
Setting Up Your "Health Savings Pot"
Creating your dedicated savings fund is simple. The key is to keep it separate from your everyday current account to avoid accidentally spending it.
Best options for your health savings:
- Easy-Access Savings Account: This is the perfect choice. It allows you to deposit your monthly premium savings and withdraw the money instantly when you need it for a medical bill.
- Cash ISA: If you haven't used your annual ISA allowance, a Cash ISA offers the same easy access but with the added benefit of tax-free interest, helping your pot grow slightly faster.
- "Savings Spaces" in Digital Banks: Many modern app-based banks allow you to create separate "pots" or "spaces" within your main account. You can name one "Health Fund" and set up an automatic monthly transfer.
The goal is accessibility and discipline. Automate the transfer for the day after you get paid, so you save without thinking about it.
What Could Your Self-Funded Savings Pot Cover?
With the NHS facing significant pressures—the waiting list for elective treatment in England remains over 7.5 million—being able to pay for minor diagnostics and treatments yourself can be incredibly empowering. It allows you to bypass queues and get answers or relief quickly.
Here are some typical costs for private treatments in the UK that you could comfortably cover from a well-funded health savings pot.
| Treatment / Service | Estimated Self-Pay Cost (2025) | Notes |
|---|---|---|
| Private GP Consultation | £80 – £150 | For a quick diagnosis or referral. |
| Specialist Consultation | £200 – £350 | For an initial meeting with a consultant. |
| Physiotherapy Session | £50 – £90 | Per session, often bought in blocks. |
| Ultrasound Scan | £300 – £500 | A common diagnostic imaging tool. |
| Blood Tests (Comprehensive) | £100 – £400 | Depends on the complexity of the tests. |
| X-Ray | £150 – £250 | For diagnosing bone or joint issues. |
Paying for these directly means you don't "use up" your annual excess on small claims, reserving it for when you truly need the heavyweight backing of your insurer.
How to Choose the Right Excess Level with a PMI Broker
Choosing an excess is about finding your personal sweet spot between premium affordability and the amount you'd be comfortable paying in the event of a claim. This is where an expert broker like WeCovr provides immense value.
Our specialists can:
- Model the Costs: We can show you precise, side-by-side quotes from the UK's leading insurers, instantly demonstrating how your premium changes at each excess level (£250, £500, £1,000, etc.).
- Assess Your Affordability: We'll have an honest conversation about your budget and savings to help determine an excess that won't put you under financial strain.
- Explain the "Per Claim" vs. "Per Year" Nuance: We ensure you understand exactly how your chosen policy's excess works, so there are no surprises.
- Compare the Whole Market: We find the best PMI provider for your needs, ensuring you get the most competitive premium for your chosen excess, all at no cost to you.
Working with an FCA-authorised broker removes the guesswork and helps you make a confident, informed decision.
Beyond Excess: Other Ways to Manage Your PMI Costs
While a high excess is a powerful tool, it's not the only way to tailor a policy to your budget. Consider these other key levers:
- Hospital List: Insurers offer tiered hospital lists. Choosing a list that excludes the most expensive central London hospitals can significantly reduce your premium while still providing excellent nationwide choice.
- Outpatient Cover: You can choose to limit your cover for outpatient diagnostics and consultations (e.g., to £500 or £1,000 per year). This fits perfectly with the "self-fund" strategy, as you can cover smaller outpatient costs from your savings.
- Six-Week Wait Option: This reduces your premium by agreeing that if the NHS can provide the necessary treatment within six weeks, you will use the NHS. If the wait is longer, your private cover kicks in.
- Underwriting Type: "Moratorium" underwriting is often cheaper initially than "Full Medical Underwriting," though it has different implications for pre-existing conditions. A broker can explain which is best for you.
By combining a high excess with one or two of these other options, you can build a highly effective yet surprisingly affordable private medical insurance UK policy.
A Holistic Approach: Wellness and Your Health Strategy
The ultimate way to keep health costs down—both for yourself and your insurer—is to stay healthy. A proactive approach to wellness reduces your risk of developing acute conditions that require expensive treatment.
Key Pillars of a Healthy Lifestyle:
- Balanced Diet: Focus on whole foods, fruits, vegetables, lean proteins, and healthy fats. A good diet is fundamental to preventing many chronic and acute illnesses. To help with this, WeCovr provides complimentary access to its AI-powered calorie and nutrition tracking app, CalorieHero, for all our health and life insurance clients.
- Regular Physical Activity: Aim for at least 150 minutes of moderate-intensity activity (like brisk walking or cycling) or 75 minutes of vigorous activity (like running or HIIT) per week, as recommended by the NHS.
- Quality Sleep: Prioritise 7-9 hours of quality sleep per night. Poor sleep is linked to a weakened immune system, weight gain, and an increased risk of numerous health problems.
- Stress Management: Chronic stress can have a significant physical impact. Incorporate techniques like mindfulness, meditation, yoga, or simply spending time in nature to manage stress levels.
Furthermore, clients who purchase private medical or life insurance through WeCovr may also be eligible for discounts on other types of cover, such as home or travel insurance, providing even greater value and integrating your financial protection. Our high customer satisfaction ratings reflect our commitment to providing holistic value beyond just a policy.
Is it always better to choose a higher excess on health insurance?
What happens if I need to make a claim but haven't saved enough to cover the full excess?
Does the money I save have to be in a special 'health savings account'?
Ready to see how a higher excess could lower your private health cover premiums? The expert team at WeCovr can provide you with instant, personalised quotes from across the market.
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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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