How to Choose Between Excess Levels on PMI Policies
Navigating the world of private medical insurance in the UK can feel complex. At WeCovr, an FCA-authorised broker that has helped arrange over 900,000 policies of various kinds, we believe in clarity. A key decision you’ll face is choosing an excess level, which directly impacts your premium.
This in-depth guide will demystify the excess, helping you make an informed choice that aligns with your budget, health needs, and attitude to risk.
Balancing risk and premium cost
Choosing a private medical insurance (PMI) policy is an exercise in balancing cost and coverage. The single most effective tool you have to control your monthly premium is the excess.
Think of it like a see-saw. On one side, you have your premium (the monthly or annual amount you pay for your cover). On the other side, you have the excess (the amount you agree to contribute towards a claim).
- When your excess is high, your premium will be low.
- When your excess is low, your premium will be high.
The core of your decision is this: are you more comfortable paying a higher, fixed amount each month for the peace of mind that you'll pay little to nothing when you claim? Or would you prefer to pay a lower monthly premium and accept the risk of having to contribute a larger, pre-agreed sum if you need treatment?
There is no single "right" answer. The best choice depends entirely on your personal and financial circumstances.
What Exactly is an Excess on a Health Insurance Policy?
In simple terms, an excess is the portion of a claim that you agree to pay yourself before your insurance provider pays the rest. It is a form of co-payment that is fundamental to almost all types of insurance, from cars to homes, and health is no exception.
Let's use a simple example:
You have a private health cover policy with a £250 excess. You need a minor surgical procedure that is covered by your policy and costs £3,500.
- You will pay the first £250 of the bill (your excess).
- Your insurer will pay the remaining £3,250.
The excess only applies when you make an eligible claim. You do not pay it if you don't use your policy. It’s designed to prevent very small claims and to give policyholders a stake in the cost of their care, which helps keep overall premiums down for everyone.
Key Things to Remember About Excess:
- It's a fixed amount you choose when you take out or renew your policy.
- You only pay it when you make a claim.
- A higher excess reduces your premium.
- Most UK insurers offer a range of excess options, typically from £0 up to £1,000 or even higher.
How Do Excess Levels Impact Your PMI Premium?
The relationship between excess and premium is direct and significant. Insurers reward you for taking on a larger share of the potential risk. By choosing a higher excess, you are effectively telling the insurer that you will handle smaller claims yourself, reducing their administrative burden and financial exposure.
To illustrate this, let's look at some sample monthly premiums for a healthy 40-year-old in the UK with a comprehensive PMI policy. These are illustrative figures to show the principle in action.
| Excess Level | Illustrative Monthly Premium | Annual Premium | Potential Annual Savings (vs. £0 Excess) |
|---|---|---|---|
| £0 | £90 | £1,080 | £0 |
| £100 | £82 | £984 | £96 |
| £250 | £71 | £852 | £228 |
| £500 | £60 | £720 | £360 |
| £1,000 | £48 | £576 | £504 |
Note: Premiums are for illustration only. Your actual quote will depend on your age, location, medical history, and chosen level of cover.
As you can see, increasing the excess from £0 to £500 could reduce the annual premium by £360. Opting for a £1,000 excess could almost halve the yearly cost. This saving can make comprehensive private medical insurance UK much more accessible.
Types of Excess: Per Claim vs. Per Policy Year
This is one of the most important distinctions to understand when choosing your policy. The way your excess is applied can make a big difference to your total out-of-pocket costs.
1. Excess Per Claim (or Per Condition)
This is the most common type of excess. With this structure, you pay the excess for each separate medical condition you claim for within a policy year.
- Example: You have a £250 'per claim' excess.
- In March, you claim for physiotherapy for a bad back. You pay the first £250.
- In September, you need cataract surgery on one eye. This is a new, unrelated condition, so you pay another £250.
- Your total excess paid in the year is £500.
If you require further treatment for the same condition later in the policy year (e.g., more physio for the same back problem), you would not have to pay the excess again.
2. Excess Per Policy Year
With this structure, you pay the excess only once per policy year, regardless of how many claims you make for different conditions.
- Example: You have a £250 'per year' excess.
- In March, you claim for physiotherapy. You pay the first £250.
- In September, you need cataract surgery. You have already paid your annual excess, so you pay £0.
- Your total excess paid in the year is £250.
Comparison: Per Claim vs. Per Year
| Feature | Excess Per Claim / Per Condition | Excess Per Policy Year |
|---|---|---|
| How it works | Paid for each new, unrelated claim. | Paid only once per policy year. |
| Best for... | Individuals who are generally healthy and unlikely to make multiple claims for different issues in one year. | Individuals or families who might need to claim for several different conditions in a single year. |
| Potential Cost | Can become expensive if you are unlucky and have multiple, unrelated health problems. | Predictable. You know the maximum you will ever pay in excess costs in any given year. |
| Premium Impact | Policies with a 'per claim' excess may sometimes have slightly lower premiums than equivalent 'per year' options. | Premiums might be marginally higher to reflect the increased risk to the insurer. |
Major providers like AXA Health, Bupa, and Vitality offer both options, so it's crucial to check the policy details. An expert PMI broker can help you compare these subtle but important differences.
Choosing the Right Excess Level for You: A Step-by-Step Guide
To find your sweet spot, you need to conduct a personal assessment. Grab a pen and paper and consider these four areas.
1. Assess Your Financial Situation
This is the most critical factor. Be honest with yourself.
- Emergency Fund: Do you have savings you can access easily? If you chose a £500 excess, could you pay that amount tomorrow without causing financial hardship?
- Disposable Income: Look at your monthly budget. How much can you comfortably afford for a PMI premium? The savings from a higher excess might be the difference between getting cover or not.
- Cost vs. Savings: Use the table above as a guide. If a £500 excess saves you £360 a year, ask yourself: is it worth paying £360 more to avoid a potential £500 bill? For many, the answer is no, making a higher excess a logical choice.
2. Consider Your Health and Lifestyle
Your current health and potential future needs should guide your decision.
- Age and General Health: A young, fit, and healthy individual is statistically less likely to claim than someone older with a more sedentary lifestyle. A higher excess might feel like a safer bet if you're in good health.
- Family History: Are there hereditary conditions in your family that might emerge later in life? This might influence you towards a more comprehensive plan with a lower excess.
- Lifestyle Risks: Do you play high-impact sports? Do you have a stressful job? These factors can increase the likelihood of needing treatment for injuries or stress-related conditions.
- Family Cover: If you are insuring your children, you might anticipate more frequent, smaller claims (e.g., for ENT issues or sports injuries). In this case, a lower 'per year' excess can be very valuable.
3. Evaluate Your Attitude to Risk
This is about your personality and what helps you sleep at night.
- The Planner: Do you prefer predictable, fixed costs and hate financial surprises? A low or £0 excess might be worth the higher premium for the complete peace of mind it provides.
- The Pragmatist: Are you comfortable with a degree of calculated risk? If you're happy to "self-insure" for smaller issues in exchange for a significantly lower premium, a higher excess of £250, £500, or even £1,000 is a perfect fit.
4. Look at Your Claims History
If you've had private health cover before, your past usage is an excellent indicator of future needs. How many times did you claim in the last few years? Were the claims for minor or major issues? This experience can provide a real-world basis for your decision.
Real-Life Scenarios: Putting Excess into Practice
Let's see how different people might choose their excess level.
Scenario 1: Chloe, 29, Freelance Graphic Designer
- Profile: Young, healthy, active, non-smoker. Her income can fluctuate.
- Priority: Chloe wants to avoid long NHS waits for serious issues like a cancer diagnosis or something requiring major surgery. She's less concerned about paying for a few physiotherapy sessions herself.
- Her Choice: A £1,000 per year excess.
- Reasoning: This brings her monthly premium down to a very affordable level, fitting her freelance budget. She has more than £1,000 in her emergency savings, so she can comfortably cover the excess if needed. Her policy acts as a crucial safety net for major health events, which is her primary goal.
Scenario 2: The Singh Family (Ages 42 & 40, with children 12 & 9)
- Profile: Active family. The children play rugby and hockey. The parents are office workers who are starting to feel the effects of a more sedentary work life.
- Priority: Prompt access to specialists for the whole family for a range of potential issues, from sports injuries to diagnostics. They want to manage their potential out-of-pocket costs.
- Their Choice: A £250 per policy year excess.
- Reasoning: The 'per year' option is key. If their son needs physio for a rugby injury and their daughter needs to see an ENT specialist in the same year, they will only pay the £250 once. It provides a cap on their financial risk, making their healthcare costs predictable and manageable for the family budget.
Scenario 3: Michael, 64, Retired
- Profile: Recently retired. Has some minor, age-related joint pain but no major health conditions. He has a fixed retirement income.
- Priority: Maximum peace of mind and minimal hassle. He wants to know that if a health issue arises, he can get it sorted quickly without worrying about a large bill.
- His Choice: A £100 per claim excess.
- Reasoning: Michael is prepared to pay a higher premium for the security it buys. The low excess means that any trip to a private consultant or specialist will involve a very small, predictable cost. He values certainty over the potential savings of a higher excess.
The £0 Excess Option: Is It Ever Worth It?
Choosing a £0 excess means you will never have to contribute towards the cost of an eligible claim. It is the highest level of cover you can buy and, consequently, comes with the highest premium.
When a £0 excess might be a good idea:
- Total Peace of Mind: If your primary motivation for buying PMI is to eliminate any and all financial friction at the point of care, this is the option for you.
- Budgeting Certainty: You know your exact, fixed healthcare cost is your monthly premium. There will be no surprise bills.
- High Likelihood of Small Claims: If you have a history of needing frequent but low-cost consultations or therapies, a £0 excess could potentially save you money compared to paying a £100 or £250 excess multiple times.
However, for most people, the significant increase in premium for a £0 excess is not cost-effective. You are often paying a lot more in guaranteed premiums to avoid a relatively small, potential cost.
High Excess Levels (£500+): A Strategic Choice
Opting for a high excess is not just a "cheap option"; it's a strategic way to use private health insurance. It's often called a "catastrophe cover" approach.
You are essentially deciding to self-insure for minor and moderate health issues, using your savings to pay for them out-of-pocket if they arise. Your PMI policy then acts as a powerful financial shield against major, high-cost medical events, such as:
- Cancer treatment (which can cost tens of thousands of pounds per year)
- Heart surgery (e.g., a coronary bypass can exceed £20,000)
- Joint replacements (a private hip replacement can cost £15,000 or more)
This can be an exceptionally cost-effective strategy for the self-employed, those with substantial savings, or anyone whose main concern is being protected from life-altering medical bills while avoiding long waits for critical procedures.
A Critical Note: What Your PMI Policy Covers
It is vital to understand the fundamental purpose of private medical insurance in the UK. Standard PMI policies are 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, a broken bone).
- A chronic condition is a long-term illness that cannot be cured, only managed (e.g., diabetes, asthma, high blood pressure, eczema). Standard PMI does not cover the day-to-day management of chronic conditions.
- Pre-existing conditions – illnesses or injuries you had before you took out the policy – are also typically excluded, at least for an initial period.
Your excess applies to eligible claims for new, acute conditions. It does not change the fundamental nature of what is and isn't covered.
How a PMI Broker Like WeCovr Can Help
Choosing an excess is just one piece of the puzzle. The private medical insurance UK market is vast, with numerous providers, policy types, and benefit levels. Making the right choice can feel overwhelming.
This is where an independent, expert PMI broker adds immense value.
At WeCovr, we are authorised and regulated by the Financial Conduct Authority (FCA). Our role is to act as your expert guide, helping you navigate the market at no cost to you.
Here’s how we help:
- Understand Your Needs: We take the time to understand your health, budget, and priorities, just as outlined in this guide.
- Compare the Market: We have access to policies from a wide range of the UK's best PMI providers. We'll compare them on your behalf, looking not just at price but at crucial details like the type of excess, hospital lists, and outpatient limits.
- Demystify the Jargon: We explain the differences between 'per claim' and 'per year' excess, moratorium vs. full medical underwriting, and what different benefit levels mean in practice.
- Find the Best Value: Our goal is to find you the most suitable cover at the most competitive price, ensuring the excess level and premium are perfectly balanced for your circumstances. Our high customer satisfaction ratings reflect our commitment to this.
As a WeCovr client, you also get complimentary access to our AI-powered calorie and nutrition tracking app, CalorieHero, to support your health and wellness goals. Furthermore, customers who purchase PMI or Life Insurance through us may also be eligible for discounts on other insurance products.
Frequently Asked Questions (FAQs)
What happens if my treatment costs less than my excess?
Can I change my excess level mid-way through my policy year?
Do I pay the excess to the insurance company or the hospital?
Does every family member on a policy have their own excess?
Ready to find the perfect balance between premium and protection? The right excess level can make private health cover more affordable than you think.
[Get your free, no-obligation PMI quote from our friendly experts today and let WeCovr find the right private health cover 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?
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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.
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