How Private Health Insurance Premiums Are Calculated
As an FCA-authorised expert with over 900,000 policies of various kinds issued, we at WeCovr know that understanding the cost of private medical insurance in the UK can feel complex. This guide demystifies how your premiums are calculated, giving you the clarity to choose the right cover with confidence.
Understand the key factors driving PMI costs, from age to lifestyle and location
Private Medical Insurance (PMI) offers peace of mind and swift access to high-quality healthcare when you need it most. But what determines the monthly or annual premium you pay?
Insurers calculate your premium based on risk. In simple terms, they assess the likelihood that you will need to make a claim and the potential cost of that claim. This risk assessment is built on a combination of personal factors you can't change and policy choices you can control.
The core elements that shape your premium are:
- Your Age: The older you are, the higher the statistical chance of needing medical care.
- Your Location: Treatment costs vary significantly across the UK.
- Your Lifestyle: Habits like smoking have a direct impact on your health risk.
- Your Policy Choices: The level of cover, excess, and hospital list you choose are powerful cost levers.
- Your Medical History: The underwriting process assesses your past health to determine cover.
Let's explore each of these factors in detail, so you can see exactly what goes into the price of your policy.
Core Personal Factors: The Unchangeable Realities
These factors are based on who you are and where you live. While you can't change them, understanding their impact is the first step to finding a policy that fits your budget.
Age: The Single Biggest Influence on Your Premium
Age is the most significant factor in calculating private health insurance premiums. As we get older, our bodies naturally become more susceptible to illness and injury.
UK public health data clearly shows this trend. According to the latest NHS Digital statistics, hospital admission rates in England rise steeply with age. For instance, the admission rate for those aged 75-79 is more than double that of those aged 45-49. Insurers use this large-scale data to predict the likelihood of claims.
This means a policy for a 30-year-old will be substantially cheaper than for a 60-year-old, all other factors being equal. Premiums are typically reviewed annually, and you should expect a gradual increase each year simply due to your age. This is often referred to as an "age-related increase".
| Age Bracket | Example Monthly Premium (Mid-Level Cover) | Why the Cost Varies |
|---|---|---|
| 25-34 | £45 - £65 | Lowest risk group. Generally healthy, with fewer claims for major conditions. |
| 35-44 | £60 - £85 | Risk begins to increase gradually. More likely to start needing minor procedures. |
| 45-54 | £80 - £120 | A significant jump as the risk of age-related conditions (e.g., joint issues) rises. |
| 55-64 | £110 - £180+ | A high-risk age bracket. Likelihood of needing major surgery or cancer treatment increases. |
Note: These are illustrative figures for a non-smoker outside London. Your actual quote will vary.
Your Postcode Matters: The "Medical Inflation" Factor
Where you live has a direct bearing on your premium. This isn't about the health risks of your area, but rather the cost of private medical treatment there.
Private hospitals in Central London, such as The London Clinic or those in the Harley Street Medical Area, have much higher operating costs and charge more for consultations, diagnostics, and surgery than a private hospital in Newcastle or Cardiff.
Insurers pass this cost variation on to the customer. They create pricing tiers based on postcode, reflecting the local cost of care.
| Region Tier | Example Cities/Areas | Relative Cost Impact |
|---|---|---|
| Central London | Postcodes like W1, WC1, SW1 | Highest |
| Greater London | Outer London boroughs | High |
| Major UK Cities | Manchester, Birmingham, Edinburgh | Medium-High |
| Rest of UK | Most other towns and rural areas | Standard |
You can control this factor by choosing a policy with a specific hospital list, which we'll cover later.
Lifestyle Choices: Smoking and Alcohol Consumption
Insurers will ask direct questions about your lifestyle, with smoking being the most critical.
Smoking & Vaping
If you smoke or use nicotine products (including vapes and patches), you will pay a significantly higher premium—often 30% to 50% more. The health risks associated with smoking are well-documented and severe. Data from the NHS shows that smoking is the leading cause of preventable death and is linked to over 50 serious health conditions, including multiple types of cancer, heart disease, stroke, and COPD.
Because of this massively increased risk profile, insurers apply a standard "smoker loading" to your premium. You must be honest about your smoking status; failing to do so is considered non-disclosure and could lead to your policy being cancelled and claims being rejected.
Alcohol Consumption
Insurers are less likely to ask for your exact weekly unit consumption on an initial application than they are for smoking. However, a history of alcohol-related health problems will be considered during underwriting. Conditions like liver disease that are linked to excessive alcohol intake would be classified as pre-existing and excluded from cover.
Leading a healthy lifestyle not only benefits your well-being but can also keep your insurance costs down in the long run by reducing your risk of developing new conditions.
Your Policy Choices: Tailoring Your Cover and Cost
This is where you have the most control. By adjusting the components of your policy, you can find the perfect balance between comprehensive cover and an affordable premium. A specialist PMI broker like WeCovr can be invaluable in helping you navigate these options.
The Level of Cover: From Basic to Comprehensive
Private medical insurance UK policies are typically offered in three main tiers.
-
Basic Cover (Inpatient Only): This is the entry-level option. It covers you for treatment when you are admitted to a hospital and require a bed overnight (inpatient) or for the day (day-patient). It includes costs like surgery, hospital accommodation, and specialist fees. It generally does not cover the initial consultations or diagnostic tests needed to identify the problem.
-
Intermediate Cover (Inpatient & Limited Outpatient): This level includes everything in a basic policy, plus a set amount of cover for outpatient services. This could include, for example, up to £1,000 for specialist consultations and diagnostic tests (like MRI or CT scans) that lead to an inpatient admission.
-
Comprehensive Cover (Full Inpatient & Outpatient): This is the most extensive level of cover. It provides full cover for inpatient and day-patient treatment, as well as full cover for all eligible outpatient consultations, diagnostics, and tests. It often includes more extensive mental health support and other therapies as standard.
| Feature | Basic Cover | Intermediate Cover | Comprehensive Cover |
|---|---|---|---|
| Inpatient/Day-patient Care | ✅ Yes | ✅ Yes | ✅ Yes |
| Surgeon/Anaesthetist Fees | ✅ Yes | ✅ Yes | ✅ Yes |
| Cancer Cover | ✅ Yes (often extensive) | ✅ Yes (often extensive) | ✅ Yes (often extensive) |
| Outpatient Consultations | ❌ No | ✅ Yes (Usually capped) | ✅ Yes (Often unlimited) |
| Outpatient Diagnostics | ❌ No | ✅ Yes (Usually capped) | ✅ Yes (Often unlimited) |
| Mental Health Cover | Limited / Add-on | Limited / Add-on | Often included |
| Therapies (Physio etc.) | ❌ No | Add-on | Often included / Add-on |
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 each policy year. It works just like the excess on a car or home insurance policy.
The higher the excess you choose, the lower your monthly premium will be. This is because you are agreeing to take on a larger portion of the initial financial risk, reducing the insurer's potential payout.
Common excess levels are £0, £100, £250, £500, and £1,000.
| Excess Level | Example Monthly Premium | How It Works |
|---|---|---|
| £0 | £120 | You pay nothing towards your first claim of the year. Your premium is highest. |
| £250 | £105 | You pay the first £250 of your claim. Your premium is reduced. |
| £500 | £90 | You pay the first £500 of your claim. A popular choice for balancing cost and risk. |
| £1,000 | £75 | You pay the first £1,000 of your claim. Your premium is significantly lower. |
Choosing a higher excess can be a smart way to make a comprehensive policy more affordable, especially if you are healthy and don't expect to claim for minor issues.
Hospital Lists: Choosing Where You Can Be Treated
As discussed, the cost of private treatment varies by location. Insurers offer different "hospital lists" that allow you to tailor your cover and control costs.
- Local List: Restricts you to a select group of hospitals in your local area. This is the most affordable option but offers the least choice.
- National List: Gives you access to a wide network of private hospitals across the UK, but typically excludes the most expensive ones in Central London. This is the most common and popular choice.
- London / Premium List: Includes the top-tier, high-cost hospitals in Central London. This offers the most choice but comes with the highest premium.
Choosing a national list instead of a full London-access list can reduce your premium by 10-20% or more.
Optional Extras: Do You Need Dental, Optical, or Mental Health Cover?
Most PMI policies allow you to add optional benefits for an extra cost. Common add-ons include:
- Mental Health Cover: While basic policies may offer some support, a full mental health add-on provides more extensive cover for psychiatric treatment, therapy, and counselling.
- Dental & Optical Cover: This helps with the costs of routine check-ups, treatments, glasses, and contact lenses. It often operates more like a cashback plan for routine expenses.
- Therapies Cover: This adds or extends cover for treatments like physiotherapy, osteopathy, and chiropractic care.
- Travel Cover: Some insurers offer a bolt-on that provides worldwide travel insurance.
Carefully consider whether you need these. If you have a good corporate dental plan or are happy to self-fund routine optical costs, you can save money by not adding them to your PMI policy.
Medical History and Underwriting: The Foundation of Your Policy
This is a critical area to understand. UK private health insurance is designed to cover new, unexpected medical conditions that arise after you join. It is not designed to cover conditions you already have.
The Golden Rule: PMI Covers Acute Conditions, Not Chronic Ones
It is vital to grasp the difference between acute and chronic conditions.
-
An Acute Condition is a disease, illness, or injury that is likely to respond quickly to treatment and lead to a full recovery (or a return to your previous state of health). Examples include a broken bone, appendicitis, cataracts, or a joint replacement. PMI is designed to cover these.
-
A Chronic Condition is an illness that cannot be cured, only managed. It is long-lasting and requires ongoing monitoring and treatment. Examples include diabetes, asthma, high blood pressure, and Crohn's disease. Standard UK PMI does not cover the ongoing management of chronic conditions.
If you develop a chronic condition after taking out a policy, PMI will typically cover the initial diagnosis and treatment to stabilise you, but not the long-term management, which remains with the NHS.
Understanding Underwriting: How Insurers Assess Your Past Health
"Underwriting" is the process an insurer uses to assess your medical history and decide what they will and will not cover. There are two main types in the UK.
1. Moratorium Underwriting
This is the most common and simplest method.
- How it works: You don't complete a detailed medical questionnaire. The policy simply excludes any medical condition for which you have had symptoms, treatment, or sought advice in the 5 years prior to the policy start date.
- The "2-Year Rule": An exclusion for a pre-existing condition can be lifted if, after your policy starts, you go for a continuous 2-year period without experiencing any symptoms, needing any treatment, or seeking any advice for that condition.
- Pros: Quick and easy application process.
- Cons: Lack of certainty. You only find out for sure if a condition is covered when you make a claim, which can lead to delays and disputes.
2. Full Medical Underwriting (FMU)
This method is more detailed upfront.
- How it works: You complete a full health questionnaire, declaring your medical history. The insurer's underwriting team reviews it and may ask for more information from your GP (with your consent).
- The Result: The insurer then issues your policy documents with a clear list of any specific, named exclusions. These exclusions are usually permanent.
- Pros: Complete certainty from day one. You know exactly what is and isn't covered.
- Cons: The application process is longer and more intrusive.
An expert PMI broker can help you decide which underwriting method is best for your personal circumstances.
Pre-existing Conditions: What You MUST Declare
Honesty is paramount. When applying with Full Medical Underwriting, you must declare everything you are asked about. Hiding a condition is non-disclosure and can invalidate your entire policy, even for unrelated claims.
Example: Imagine you had physiotherapy for a painful shoulder 3 years ago.
- With Moratorium Underwriting, this would be automatically excluded. If your shoulder remains trouble-free for the first 2 years of your policy, it may then become eligible for cover.
- With Full Medical Underwriting, you would declare it. The insurer would likely place a permanent exclusion on your policy for your shoulder.
How WeCovr Helps You Find the Best Value
Navigating the myriad of providers, policy options, and underwriting types can be overwhelming. This is where an independent, expert broker like WeCovr adds immense value.
Instead of approaching one insurer, we compare the market for you, analysing policies from all the UK's leading providers like Aviva, AXA Health, Bupa, and Vitality. Our service is completely free to you; we are paid a commission by the insurer you choose. You pay the same premium (or often less) than if you went direct.
We help you by:
- Explaining Your Options: We talk you through the impact of different excess levels, hospital lists, and optional extras in plain English.
- Tailoring Your Policy: We help you build a policy that provides the cover you need at a price you can afford, ensuring you don't pay for benefits you won't use.
- Guiding You Through Underwriting: We can help you decide between moratorium and FMU and assist with the application forms.
- Providing Ongoing Support: We are here to help at renewal or if you need to make a claim.
As a WeCovr client, you also get complimentary access to our AI-powered diet and calorie tracking app, CalorieHero, to support your health goals. Furthermore, customers who purchase PMI or Life Insurance through us are eligible for discounts on other types of cover, like home or travel insurance.
Beyond the Basics: Other Factors That Can Influence Your Premium
A few other elements can play a role in your annual costs.
-
No Claims Discount (NCD): Similar to car insurance, many PMI policies feature an NCD. For every year you don't make a claim, you earn a discount on your renewal premium, up to a maximum level (e.g., 60-70%). Making a claim will typically reduce your NCD level, increasing your subsequent premium.
-
Wellness Programmes: Some insurers, most notably Vitality, offer innovative wellness programmes. They incentivise healthy living by rewarding you for activities like tracking your steps, going to the gym, or completing health checks. These rewards can include premium discounts, cinema tickets, or other benefits. Taking an active approach to your health can literally pay off.
-
Group vs. Individual Policies: If you are covered by a company health insurance scheme, the premium is often lower per person than an equivalent individual policy. This is because the insurer's risk is spread across a group of people, and administration is simpler.
A Practical Example: Calculating Premiums for "The Clarks"
Let's see how these factors work in practice for a fictional couple.
Meet Sarah and Tom Clark:
- Sarah: 35, non-smoker, office worker in Bristol.
- Tom: 38, non-smoker, works in construction in Bristol.
They want a mid-level policy with a national hospital list.
| Policy Choice | Base Premium (Illustrative) | New Premium (Illustrative) | Change |
|---|---|---|---|
| Initial Quote (Mid-cover, £250 excess) | £130 / month | - | - |
| Option 1: Increase Excess to £500 | £130 / month | £115 / month | -11.5% |
| Option 2: Add Comprehensive Mental Health | £130 / month | £155 / month | +19% |
| Option 3: Remove Outpatient Cover (Inpatient only) | £130 / month | £85 / month | -34% |
This example shows how powerfully your choices can affect the final premium. By increasing their excess and forgoing full outpatient cover, the Clarks could secure basic protection for a much lower cost. Alternatively, by paying more, they could get comprehensive mental health support.
Frequently Asked Questions (FAQs)
Why do my private health insurance premiums go up every year?
Can I get private health insurance for a pre-existing medical condition?
Is it cheaper to buy direct from an insurer or use a broker like WeCovr?
Do I have to declare my mental health history when applying for PMI?
Understanding how your premium is calculated puts you in control. By making informed choices about your level of cover, excess, and hospital options, you can secure the peace of mind that private medical insurance provides at a price that works for you.
Ready to find the right private health cover?
Contact WeCovr today for a free, no-obligation quote. Our expert advisors will compare the UK's leading insurers to find you the best policy at the best price.
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:
Our Group Is Proud To Have Issued 800,000+ Policies!
We've established collaboration agreements with leading insurance groups to create tailored coverage
How It Works
1. Complete a brief form
2. Our experts analyse your information and find you best quotes
3. Enjoy your protection!
Any questions?
Learn more
Who Are WeCovr?
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.
Just a quick and simple form and an easy conversation with one of our experts and your valuable insurance policy is in place for that needed peace of mind!