How Do Excess and Claims Limits Work for PMI
Navigating the world of private medical insurance in the UK can feel complex, but understanding a few key terms is all it takes to feel in control. At WeCovr, an FCA-authorised broker that has helped arrange over 900,000 policies, we believe clarity is king. This guide demystifies the core components of your policy.
Explains how excess levels, outpatient caps, and benefit limits affect payouts, premium levels, and consumer risk
When you build a private medical insurance (PMI) policy, you are essentially tailoring it to your personal needs and budget. Three of the most important dials you can adjust are your excess, your outpatient limit, and your overall benefit limits.
Think of them as levers:
- Excess: The amount you agree to pay towards a claim. A higher excess typically means a lower monthly premium.
- Outpatient Limit: A cap on how much your policy will pay for diagnostics and consultations that don't require a hospital bed. Choosing a lower limit reduces your premium.
- Benefit Limits: The maximum amount your insurer will pay out, either for specific treatments (like therapy) or across your entire policy year.
Understanding how these elements interact is the key to designing a policy that provides the right level of protection without overstretching your finances. Getting this balance right determines how much financial risk you retain versus how much you transfer to the insurer, directly impacting your peace of mind and your wallet.
What is an Excess in Private Health Insurance?
An excess (sometimes called a deductible) is a fixed amount of money you agree to pay towards the cost of your private medical treatment when you make a claim. The insurer then pays the remaining balance, up to the limits of your policy.
It’s a form of cost-sharing. By agreeing to pay a small portion of the initial cost, you help reduce the insurer's overall risk, and in return, they offer you a lower premium.
Example: Imagine you need knee surgery that costs £6,000 and your policy has a £250 excess.
- You pay the first £250 directly to the hospital or practitioner.
- Your insurer pays the remaining £5,750.
If your treatment cost is less than your excess amount, you would pay the full bill yourself, and you wouldn't need to make a claim. For instance, if a consultation costs £200 and your excess is £250, you would simply pay the £200.
How Excess is Applied: Per Claim vs. Per Policy Year
Insurers apply an excess in one of two ways, and it's vital to know which one your policy uses.
- Per Policy Year: You only pay the excess once per person, per policy year, regardless of how many separate claims you make. This is the most common and often the most consumer-friendly option in the UK PMI market.
- Per Claim: You pay the excess for each new, unrelated claim you make within the policy year. This can become costly if you are unlucky enough to need treatment for multiple different conditions.
Let's see how this works in practice for a policyholder named David, who has a £250 excess.
| Scenario | Excess 'Per Policy Year' | Excess 'Per Claim' |
|---|---|---|
| Claim 1: Knee investigation & surgery in February (Cost: £5,000) | David pays £250. | David pays £250. |
| Claim 2: Separate cataract surgery in September (Cost: £3,000) | David pays £0. (Excess already met) | David pays another £250. |
| Total Excess Paid by David | £250 | £500 |
As you can see, a 'per year' excess offers more predictable costs. When comparing quotes, always check this detail.
The Direct Link Between Excess Level and Your Premium
The level of excess you choose has a direct and significant impact on your monthly or annual premium. The principle is simple: the more financial risk you are willing to take on (a higher excess), the less you will pay for your cover.
Insurers offer a range of excess options, typically from £0 up to £1,000 or more.
Illustrative Impact of Excess on Monthly Premiums:
| Excess Level | Illustrative Monthly Premium | Your Financial Risk per Year |
|---|---|---|
| £0 | £95 | £0 |
| £100 | £88 | £100 |
| £250 | £75 | £250 |
| £500 | £62 | £500 |
| £1,000 | £50 | £1,000 |
(Note: These are illustrative figures for a 40-year-old non-smoker in a mid-range UK location. Actual premiums vary widely.)
Choosing the Right Excess Level for You
The "best" excess level is a personal choice based on your financial situation.
- Consider a lower excess (£0 - £250) if you prefer predictable costs and want to minimise out-of-pocket expenses when you claim. This is a good option if you don't have significant savings readily available.
- Consider a higher excess (£500 - £1,000) if you are comfortable paying this amount, have savings you can dip into, and your main priority is achieving the lowest possible monthly premium. You are essentially self-insuring for the smaller claims.
An experienced PMI broker, such as WeCovr, can provide quotes for various excess levels, allowing you to see the exact financial trade-off and make an informed decision that suits your budget and risk appetite.
Understanding Outpatient Limits and Caps
While your core PMI policy will almost always cover treatment that requires a hospital bed (inpatient) or a dedicated hospital seat for a procedure (day-patient), cover for outpatient services is often where policies differ the most.
What is Outpatient Cover?
Outpatient services are medical procedures, tests, or consultations that do not require you to be admitted to hospital. They are typically the first step in diagnosing a health issue.
Common outpatient services include:
- Specialist Consultations: Your first meeting with a consultant (e.g., a cardiologist or dermatologist) after a GP referral.
- Diagnostic Tests: MRI scans, CT scans, X-rays, and blood tests needed to figure out what's wrong.
- Therapies: Physiotherapy, osteopathy, or sessions with a clinical psychologist.
Without outpatient cover, you would have to rely on the NHS for diagnosis before you could use your PMI for private treatment, potentially delaying the process.
How Outpatient Limits Work
Insurers provide outpatient cover in a few different ways, creating a "good, better, best" structure.
- No Cover: Some budget-friendly policies strip out outpatient cover entirely. You would pay for all consultations and diagnostic scans yourself.
- Monetary Cap: This is the most common approach. Your policy will have a fixed financial limit for all outpatient services per year, such as £500, £1,000, or £1,500. Once you hit this limit, you must pay for any further outpatient costs yourself.
- Full Cover: More comprehensive (and expensive) policies offer "full" outpatient cover, meaning there is no set financial limit for your diagnostic journey.
The Impact of Outpatient Limits on Your Premium and Risk
Just like with the excess, the level of outpatient cover you select directly influences your premium. More comprehensive cover means a higher premium.
Illustrative Impact of Outpatient Limits on Monthly Premiums:
| Outpatient Cover Level | Illustrative Monthly Premium | Consumer Risk |
|---|---|---|
| None | £55 | You pay 100% of all diagnostic and consultation costs out-of-pocket. |
| £1,000 Cap | £75 | You are covered up to £1,000; you pay any costs beyond that. |
| Full Cover | £90 | No financial cap on diagnostics; your journey to treatment is fully covered. |
(Note: Illustrative figures based on a £250 excess for a 40-year-old.)
The risk of choosing a low cap is that a single complex diagnostic process can easily exceed it. For example, a specialist consultation (£250) followed by a single MRI scan (£750) would exhaust a £1,000 limit before any further tests or follow-up appointments. Choosing a policy with no outpatient cover leaves you entirely reliant on your own funds or the NHS for diagnosis.
Navigating Overall Benefit Limits and Annual Maximums
While excess and outpatient caps manage costs on individual claims, overall benefit limits set the ceiling for what an insurer will pay out in total.
What Are Annual Benefit Limits?
An annual benefit limit is the absolute maximum amount your insurer will pay for all your claims combined within a single policy year.
For the vast majority of mainstream private medical insurance UK policies, this limit is very high – often £1 million or even stated as "unlimited". This is designed to give you peace of mind that even in the case of prolonged, expensive treatment (like complex cancer care), you are unlikely to breach your cover limit.
However, some cheaper, more basic policies may have lower overall limits (e.g., £50,000 per year). It's crucial to check this figure, as it defines the ultimate level of your safety net.
Specific Benefit Limits: The Small Print Matters
More important for most consumers are the specific sub-limits within the policy. Even on a policy with an "unlimited" overall maximum, there are often caps on certain types of treatment. This is how insurers manage costs for services that can have highly variable usage.
Common areas with specific benefit limits include:
- Mental Health: A policy might offer outpatient mental health cover but cap it at £1,500 per year or limit you to 10 therapy sessions.
- Complementary Therapies: Cover for physiotherapy, osteopathy, or chiropractic treatment is often limited to a set number of sessions (e.g., 6 or 8 sessions) after a referral.
- Out-of-network Hospitals: Some policies use a "hospital list". If you choose to be treated at a more expensive hospital not on your list (e.g., a prime central London hospital), the insurer may only contribute a percentage of the cost.
- Advanced Cancer Drugs: While core cancer cover is a staple of PMI, some policies may place limits on experimental drugs or treatments that are not approved by the National Institute for Health and Care Excellence (NICE).
Example of Potential Sub-Limits in a Mid-Range Policy:
| Benefit Type | Limit |
|---|---|
| Overall Annual Limit | Unlimited |
| Outpatient Cover | £1,500 per year |
| Mental Health Treatment | Up to 8 outpatient therapy sessions |
| Physiotherapy | Up to 6 sessions post-surgery |
| NHS Cash Benefit | £100 per night (if you choose to use the NHS) |
| Private Ambulance | Up to 2 journeys per year, when medically necessary |
Why These Limits Exist and How They Affect You
Insurers use these limits to keep policies affordable and predictable. Without them, premiums would need to be significantly higher to cover the potential for unlimited use of every possible service.
For you, the consumer, this means you need to read your policy documents carefully. An expert PMI broker like WeCovr excels at this, highlighting these specific limits during the comparison process to ensure there are no surprises when you need to make a claim. They help you match your specific health priorities with a policy that offers generous limits where you need them most.
The Critical Distinction: Acute vs. Chronic Conditions
This is perhaps the most important concept to understand about UK private medical insurance. Standard PMI policies are designed to cover acute conditions, not chronic ones.
-
An acute condition is a disease, illness, or injury that is likely to respond quickly to treatment and from which you are expected to make a full recovery. Examples include a broken bone, appendicitis, a hernia, or a cataract. PMI aims to get you diagnosed and treated for these conditions swiftly, returning you to your previous state of health.
-
A chronic condition is a long-term health issue that cannot be cured, only managed. This includes conditions like diabetes, asthma, high blood pressure (hypertension), arthritis, and Crohn's disease. The management of these conditions remains with the NHS.
Similarly, pre-existing conditions – any illness or symptom for which you have sought advice or treatment in the years immediately before taking out the policy (typically 5 years) – are also excluded, at least for an initial period.
| Feature | Acute Condition | Chronic Condition |
|---|---|---|
| Definition | Short-term, curable, sudden onset | Long-term, incurable, requires ongoing management |
| Examples | Pneumonia, broken leg, gallstones, joint replacement | Diabetes, asthma, high blood pressure, eczema |
| Treatment Goal | Cure the condition, return to normal health | Manage symptoms, slow progression, maintain quality of life |
| Covered by Standard PMI? | Yes | No |
PMI may cover the initial diagnosis of a chronic condition. For example, it would cover the tests that lead to a diagnosis of diabetes. However, the long-term management, including medication and regular check-ups, would then be passed back to your NHS GP.
Putting It All Together: A Real-World Claims Scenario
Let's follow a fictional customer, Susan, to see how these elements combine during a real claim.
Susan's Policy Details:
- Provider: A major UK insurer
- Excess: £250 (applied per policy year)
- Outpatient Limit: £1,000 per policy year
- Inpatient/Day-patient Cover: Full
Susan's Health Journey:
- GP Visit: Susan experiences persistent shoulder pain and her GP refers her to an orthopaedic specialist.
- Outpatient Consultation: She uses her PMI to see a private consultant. Cost: £250.
- Outpatient Diagnostics: The consultant recommends an Ultrasound and an MRI scan to diagnose the problem. Cost: £400 + £750 = £1,150.
- Diagnosis: The scans reveal a severe rotator cuff tear requiring surgery.
- Inpatient Surgery: Susan is admitted to a private hospital for day-case surgery. Cost: £4,800.
How the Claim is Settled:
| Step | Cost | Paid by Insurer | Paid by Susan | Notes |
|---|---|---|---|---|
| Outpatient Services | £1,400 | £1,000 | £400 | The total cost (£1,400) exceeded her £1,000 outpatient limit. |
| Inpatient Surgery | £4,800 | £4,550 | £250 | The insurer pays the full cost minus her £250 annual excess. |
| Total Costs | £6,200 | £5,550 | £650 (£400 outpatient overage + £250 excess) | Susan's excess was applied to the inpatient part of the claim. |
In this scenario, Susan's PMI covered almost 90% of her total treatment costs, giving her fast access to diagnosis and surgery. Her out-of-pocket costs were predictable, based on the limits she chose when she bought the policy.
WeCovr's Expert Guidance: Finding Your Perfect Balance
The UK's private health cover market offers incredible choice, but this can also be overwhelming. Trying to balance premiums, excesses, and benefit limits on your own is a daunting task. This is where WeCovr provides invaluable support.
As an FCA-authorised broker specialising in the UK PMI market, our advisors provide a professional, friendly service at no extra cost to you. We take the time to understand:
- Your budget and what you feel comfortable paying each month.
- Your health priorities and what kind of cover is most important to you.
- Your tolerance for risk and what level of excess you are comfortable with.
We then compare policies from a panel of the UK's leading insurers, clearly explaining the differences in cover, limits, and hospital access. Our goal is to empower you to find that perfect balance, ensuring your policy is both affordable and robust.
Furthermore, WeCovr customers who purchase PMI or life insurance receive added value, including complimentary access to our AI-powered calorie and nutrition tracking app, CalorieHero, and discounts on other insurance products, helping you manage both your health and your finances.
The Wider Context: Why Understanding Your Policy Matters
With NHS waiting lists in England remaining a significant concern—the list stood at around 7.54 million cases in recent official statistics from NHS England—more people than ever are turning to private medical insurance for peace of mind. A private health cover plan offers a way to bypass long waits for diagnosis and treatment, giving you more control over your healthcare journey.
However, this peace of mind is only truly effective if you understand what your policy does and does not cover. Taking the time to learn about excesses and limits is an investment in your future health. It ensures that when you need to use your policy, it performs exactly as you expect it to.
Alongside a robust insurance plan, proactive health management remains your best defence. A balanced diet, regular physical activity (aiming for 150 minutes of moderate-intensity activity a week), and sufficient sleep (7-9 hours for most adults) are foundational pillars of well-being that can reduce your long-term health risks.
What happens if my treatment costs less than my excess?
Can I change my excess or cover level mid-policy?
Is cancer treatment always fully covered by PMI?
Why doesn't PMI cover pre-existing or chronic conditions?
Ready to find a private medical insurance policy that fits you perfectly? The expert advisors at WeCovr are here to help. Get your free, no-obligation quote today and gain clarity and confidence in your health cover choices.
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.
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