How PMI Premiums Are Calculated Factors That Matter
As an FCA-authorised broker that has helped arrange over 900,000 policies, WeCovr knows that understanding private medical insurance in the UK can feel complex. This guide demystifies how your premium is calculated, empowering you to make informed choices about your health cover.
Demystifying the variables impacting your monthly insurance premium
A private medical insurance (PMI) premium is the regular amount—usually paid monthly or annually—you pay to an insurer in exchange for health cover. But how do insurers arrive at that specific figure? It’s not arbitrary. It's the result of a detailed risk calculation.
Insurers are experts in assessing the likelihood of a person making a claim. They analyse a combination of personal details, lifestyle choices, and the specific level of cover you select. The higher the perceived risk of you needing private medical treatment, the higher your premium will be.
Think of it as a balancing act. You are balancing the level of cover you want against a premium that fits your budget. In this guide, we'll break down every single factor, from the most obvious to the less well-known, so you can see exactly what drives the cost of your policy.
Core Personal Factors: The 'You' in Your Premium
These are the fundamental details about you that form the bedrock of your premium calculation. While you can't change your age or (easily) your location, understanding their impact is crucial.
Age: The Unavoidable Factor
Age is, without doubt, the single biggest determinant of your PMI premium. From an insurer's perspective, the statistical reality is that as we get older, we are more likely to experience health issues and require medical treatment.
- Twenties and Thirties: Premiums are at their lowest as individuals in this age group are generally healthier and less likely to claim.
- Forties and Fifties: Premiums begin to rise more noticeably as the risk of developing conditions like joint problems, cardiovascular issues, or certain cancers increases.
- Sixties and Beyond: This is where you see the most significant premium increases. The likelihood of needing procedures such as hip replacements, cataract surgery, or extensive diagnostic tests grows substantially.
Insurers use vast datasets called "actuarial tables" to predict the average cost of claims for each age. This is why your premium will increase each year on renewal, even if you haven't made a claim. This is due to a combination of your "age-rated" increase and medical inflation.
Illustrative Monthly Premiums by Age
The table below shows example costs for a non-smoking individual with a mid-range policy and a £250 excess. Actual quotes will vary significantly.
| Age Bracket | Illustrative Monthly Premium | Common Health Concerns at This Age |
|---|---|---|
| 30-39 | £45 | Musculoskeletal issues, early diagnostics |
| 40-49 | £65 | Joint pain, heart health checks, digestive issues |
| 50-59 | £90 | Cancer screenings, joint replacements, cardiovascular care |
| 60-69 | £150+ | Cataracts, complex surgeries, ongoing monitoring |
Location, Location, Location: Your Postcode Matters
Where you live in the UK has a direct and significant impact on your premium. This isn't about local health risks; it's purely about the cost of private medical care in your area.
Private hospitals in major cities, particularly Central London, have much higher running costs—from consultant fees and nursing staff wages to rent and state-of-the-art equipment. These costs are passed on to insurers, who in turn factor them into the premiums for customers living in those postcodes.
- High-Cost Areas: Central London postcodes can increase a premium by as much as 50% compared to the national average.
- Mid-Cost Areas: Major cities like Manchester, Birmingham, and Bristol have higher costs than rural areas but are significantly cheaper than London.
- Low-Cost Areas: Rural parts of Scotland, Wales, and Northern England typically have the lowest premiums due to less expensive local private facilities.
You can control this factor by choosing a policy with a specific "hospital list," which we'll cover later.
Your Lifestyle Choices: Smoking and Vaping
Insurers take a very clear stance on smoking: it is one of the biggest voluntary health risks a person can take. Data consistently shows that smokers are far more likely to suffer from a range of serious, expensive-to-treat conditions, including:
- Multiple types of cancer
- Heart disease
- Stroke
- Respiratory illnesses
Because of this heightened risk, insurers apply a "loading" to the premiums of smokers, which can be anywhere from 30% to 50% higher than for a non-smoker. Most insurers define a "smoker" as anyone who has used any nicotine products, including cigarettes, cigars, pipes, and often vapes, within the last 12 months.
Quitting smoking is not only the best thing you can do for your health but also one of the most effective ways to reduce your private health cover costs over time.
Policy Choices: Tailoring Your Cover and Your Cost
This is where you have the most control. The choices you make when building your policy will directly influence your monthly premium. Working with an expert PMI broker like WeCovr can help you navigate these options to find the perfect balance between comprehensive cover and affordability.
Level of Cover: From Basic to Comprehensive
Private medical insurance UK policies are typically structured in tiers.
- Core Cover (Basic): This is the foundation of every PMI policy. It covers the most expensive treatments, which are for in-patient and day-patient care. This means you're covered if you need to be admitted to a hospital bed for surgery or treatment, even if it's just for the day.
- Mid-Range Cover: This level includes Core Cover and adds a limited amount of out-patient cover. Out-patient care includes things like specialist consultations, diagnostic tests (MRI, CT scans), and sometimes therapies like physiotherapy. The limit might be a set amount, for example, £1,000 per year.
- Comprehensive Cover: This is the top tier. It provides full in-patient and day-patient cover, plus extensive or unlimited out-patient cover. It often includes additional benefits like full mental health support, dental and optical cover, and a wider range of alternative therapies.
| Level of Cover | What's Typically Included | Impact on Premium |
|---|---|---|
| Basic | In-patient & Day-patient treatment only | Lowest Cost |
| Mid-Range | Core cover + limited out-patient diagnostics/consultations | Moderate Cost |
| Comprehensive | Core cover + full out-patient + extras (mental health, therapies) | Highest Cost |
The Excess: Sharing the Cost to Lower Your Premium
An 'excess' is a fixed amount you agree to pay towards the cost of a claim. For example, if you have a £250 excess and your private treatment costs £3,000, you would pay the first £250, and the insurer would pay the remaining £2,750.
The relationship is simple: the higher your excess, the lower your monthly premium.
By agreeing to a higher excess, you are taking on a greater share of the initial financial risk, which reduces the insurer's potential payout. Most insurers offer a range of excess options, typically from £0 up to £1,000 or more. Choosing an excess you are comfortable paying is a powerful tool for managing your premium.
Illustrative Impact of Excess on a £70 Monthly Premium
| Excess Level | Adjusted Monthly Premium (Illustrative) | Annual Saving vs. £0 Excess |
|---|---|---|
| £0 | £70 | £0 |
| £100 | £65 | £60 |
| £250 | £58 | £144 |
| £500 | £50 | £240 |
| £1,000 | £42 | £336 |
Hospital Lists: Choosing Where You Can Be Treated
To manage the impact of location costs, insurers create 'hospital lists' or 'networks'. By selecting a more restricted list, you can significantly reduce your premium.
- Local/Regional List: Restricts you to a list of specified hospitals in your local area. This is often the cheapest option.
- National List: Gives you access to a broad range of private hospitals across the UK, but typically excludes the most expensive facilities in Central London.
- Premium/London List: The most comprehensive option, giving you access to virtually any private hospital in the country, including top-tier London hospitals like The London Clinic or The Lister Hospital. This option carries the highest premium.
When choosing, be realistic. If you live in Edinburgh, do you really need access to a Central London hospital? For most people, a national list provides more than enough choice.
The 'Six-Week Option': A Smart Way to Save
This is one of the most popular cost-saving features on a PMI policy. If you add the six-week option, it means that for in-patient treatment, you must first check the NHS waiting list.
- If the NHS waiting time for your required procedure is longer than six weeks, your private medical insurance will kick in immediately, and you can be treated privately.
- If the NHS can treat you within six weeks, you would use the NHS for that treatment.
According to the latest NHS England data, the median waiting time for consultant-led elective care was 14.5 weeks in mid-2024, with hundreds of thousands waiting over a year. Given these lengthy waits, the six-week option often provides a significant premium discount (up to 20-30%) with a relatively low chance of you actually having to rely on the NHS.
Underwriting: How Your Medical History is Assessed
This is a critical part of the process, and one that causes much confusion. First and foremost, it is essential to understand this point:
Standard UK private medical insurance is designed to cover acute conditions that arise after you take out the policy. It does not cover chronic or pre-existing conditions.
- 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 cataract, a hernia, a broken bone).
- 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, it has no known cure, it is likely to recur, or it needs palliative care (e.g., diabetes, asthma, hypertension).
There are two main ways an insurer will assess your medical history to apply these rules.
Moratorium Underwriting (The 'Wait and See' Approach)
This is the most common and straightforward method.
- How it works: You do not need to fill out a detailed medical questionnaire when you apply. Instead, the insurer automatically excludes any medical conditions you have had symptoms, medication, or advice for in the five years before your policy started.
- The 'two-year rule': An exclusion for a pre-existing condition can be lifted if, after your policy starts, you go for a continuous two-year period without seeking any treatment, advice, or medication for that specific condition.
- Pros: Quick and easy to set up. You don't have to recall your entire medical history.
- Cons: There can be uncertainty. You won't know for sure if a condition is covered until you make a claim and the insurer investigates your medical history.
Full Medical Underwriting (FMU) (The 'Tell All' Approach)
This method provides more certainty from the outset.
- How it works: You complete a detailed health questionnaire as part of your application, declaring your full medical history. The insurer's underwriting team assesses this information and decides what they will and will not cover.
- The outcome: You receive your policy documents with a clear list of any specific, named exclusions. These exclusions are often permanent.
- Pros: You have complete clarity from day one about what is and isn't covered.
- Cons: The application process is longer and more intrusive. If you have several past medical issues, your list of exclusions could be quite long.
The choice between these two can be complex. An adviser at WeCovr can explain the pros and cons based on your personal health history to help you decide which underwriting method is best for you.
Other Influential Factors
Beyond the core personal and policy choices, a few other elements can affect your premium, both at the start and over the life of your policy.
No Claims Discount (NCD): Rewarding Good Health
Similar to car insurance, most PMI policies feature a No Claims Discount system. It works like a ladder:
- You start on a certain level of the NCD scale (e.g., Level 0, offering a 0% discount).
- For every year you hold the policy and do not make a claim, you move up one level on the scale, earning a greater discount, often up to a maximum of 60-75%.
- If you make a claim, you will typically move down the scale by a set number of levels (e.g., two or three levels) at your next renewal, which increases your premium.
This system rewards customers who stay healthy and do not use their insurance, while ensuring that those who do claim contribute more towards the overall risk pool.
Added-Value Benefits: The 'Extras' That Count
In a competitive market, insurers add a host of benefits to their policies to make them more attractive. While many are included as standard, more comprehensive packages with richer benefits will naturally cost more. These can include:
- Digital/Virtual GP: 24/7 access to a GP via phone or video call.
- Mental Health Support: Access to counselling or therapy sessions, often without needing a GP referral.
- Wellness Programmes: Discounts on gym memberships, fitness trackers, and health screenings.
- Exclusive Member Offers: Discounts on other insurance products or lifestyle brands.
When you purchase a policy through WeCovr, you not only get expert advice but also complimentary access to our proprietary AI-powered calorie and nutrition tracker, CalorieHero. Furthermore, our clients often receive discounts on other types of insurance, such as life or home insurance, as a thank you for their custom.
Real-Life Examples: Putting It All Together
Let's look at three fictional profiles to see how all these factors combine to create a final premium. These are for illustrative purposes only.
| Profile Details | Sarah (32, Manchester) | David (55, London) | The Miller Family (Bristol) |
|---|---|---|---|
| Age(s) | 32 | 55 | 40, 38, 8, 6 |
| Smoker? | No | Yes | No |
| Location | Manchester | Central London | Bristol |
| Cover Level | Mid-Range | Comprehensive | Mid-Range |
| Excess | £250 | £100 | £500 |
| Hospital List | National | Premium London | National |
| Special Options | None | None | 6-Week Option |
| Illustrative Premium | ~£55 / month | ~£250 / month | ~£140 / month (for all 4) |
As you can see, David's combination of older age, being a smoker, living in London, and wanting the highest level of cover results in a premium that is dramatically higher than Sarah's. The Miller family effectively manages their costs by choosing a higher excess and the six-week option.
How to Get the Best Value for Your PMI Premium
Securing the right private health cover isn't about finding the absolute cheapest policy; it's about finding the best value—the policy that provides the right level of protection for your needs at a price you can afford.
Here are five expert tips:
- Review Your Cover Annually: Don't just accept your insurer's auto-renewal quote. Prices and products change. A quick market comparison can save you hundreds of pounds.
- Consider a Higher Excess: If you have some savings and could comfortably pay £500 or £1,000 towards a claim, you could make significant savings on your monthly premium.
- Choose Your Hospital List Wisely: Be realistic about where you would want to be treated. A national list is often sufficient for most people and is much cheaper than a premium London-inclusive list.
- Live a Healthier Lifestyle: Quitting smoking is the number one way to reduce your premium. Many insurers also offer rewards and discounts for engaging in healthy activities.
- Use an Independent Broker: This is the single most effective tip. An FCA-authorised broker like WeCovr works for you, not the insurer. We compare policies from all the leading UK providers, explain the complex differences, and help you tailor a policy to your exact needs and budget. Our service is free to you, and we often have access to preferential rates. Our high customer satisfaction ratings reflect our commitment to finding the right cover for our clients.
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Ready to find out exactly what your premium would be? The expert advisors at WeCovr are here to help. Get your free, no-obligation quote today and compare the UK's leading insurers in minutes.
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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