TL;DR
As FCA-authorised private medical insurance brokers in the UK, WeCovr has helped arrange cover for over 750,000 individuals and families. A question we hear daily is about 'excess'—that mysterious figure that dramatically changes your monthly premium. This guide demystifies the PMI excess, empowering you to choose wisely.
Key takeaways
- Higher Excess = Lower Monthly Premium
- Lower Excess = Higher Monthly Premium
- Illustrative estimate: You pay the first £250.
- Illustrative estimate: Your insurer pays the remaining £2,750.
- Excess Per Policy Year (Annual Excess): You pay the excess only once during each policy year, no matter how many separate claims you make. Once you've paid it, all subsequent eligible claims in that year are covered in full by the insurer. This is the most common and often preferred option.
As FCA-authorised private medical insurance brokers in the UK, WeCovr has helped arrange cover for over 750,000 individuals and families. A question we hear daily is about 'excess'—that mysterious figure that dramatically changes your monthly premium. This guide demystifies the PMI excess, empowering you to choose wisely.
How your choice of excess (£100–£1,000) affects monthly cost
Choosing the right private medical insurance (PMI) is a balancing act. You want comprehensive cover for peace of mind, but you also need a monthly premium that fits your budget. The single most effective tool you have to control this cost is the excess.
In simple terms, an excess is the amount you agree to pay towards the cost of your treatment before your insurance provider pays the rest. It’s your contribution to a claim.
The rule is straightforward:
- Higher Excess = Lower Monthly Premium
- Lower Excess = Higher Monthly Premium
Insurers offer lower premiums to those who choose a higher excess because it means you are sharing more of the financial risk. It also discourages small, frequent claims which helps keep the insurer's administrative costs down.
Let's explore exactly how this works and what it means for your wallet.
What is a Private Health Insurance Excess?
Think of a private health insurance excess like the excess on your car or home insurance. It's a pre-agreed sum you pay out-of-pocket when you make a claim. Once you've paid this amount, your insurer steps in to cover the remaining eligible costs, up to the limits of your policy.
For example, if you have a policy with a £250 excess and you need a private procedure that costs £3,000:
- Illustrative estimate: You pay the first £250.
- Illustrative estimate: Your insurer pays the remaining £2,750.
If the treatment costs less than your excess—say, a consultation costing £200 with a £250 excess—you would pay the full £200 yourself. In this case, you wouldn't technically make a claim on your policy for payment, though you would still inform your insurer to get the treatment authorised. (illustrative estimate)
Excess levels in the UK typically range from £0 up to £1,000 or more. Choosing where you sit on this scale is a crucial decision that directly shapes your private health cover.
How Excess is Applied: Per Year vs. Per Claim
It’s vital to understand how your chosen insurer applies the excess. There are two common methods:
- Excess Per Policy Year (Annual Excess): You pay the excess only once during each policy year, no matter how many separate claims you make. Once you've paid it, all subsequent eligible claims in that year are covered in full by the insurer. This is the most common and often preferred option.
- Excess Per Claim/Condition: You pay the excess for each new, distinct medical condition you claim for. If you claim for the same condition multiple times in a year (e.g., ongoing physiotherapy for a single injury), you usually only pay the excess once for that condition.
Here’s a table to illustrate the difference:
| Feature | Excess Per Policy Year | Excess Per Claim/Condition |
|---|---|---|
| How it works | Pay the excess once per 12-month policy period. | Pay the excess for each new condition you claim for. |
| Example | You have a £500 excess. Your first claim is £4,000. You pay £500. Your second claim for a different issue is £2,000. The insurer pays the full £2,000. | You have a £500 excess. Your first claim is £4,000. You pay £500. Your second claim for a different issue is £2,000. You pay another £500. |
| Best for | Individuals who might have multiple, separate health issues in a year. Offers more predictable costs. | Often results in slightly lower premiums. Can be cost-effective for those who are unlikely to claim for multiple conditions in one year. |
An experienced PMI broker like WeCovr can help you understand which providers offer which type of excess, ensuring there are no surprises when you need to make a claim.
The Direct Impact of Excess on Your Monthly Premiums
To see the powerful effect of excess on cost, let's look at some illustrative examples. The figures below are estimates for a healthy, 40-year-old non-smoker in a mid-range UK location seeking a comprehensive PMI policy.
Please note: These are for demonstration purposes only. Your actual quote will depend on your age, location, health, and chosen level of cover.
| Excess Level | Estimated Monthly Premium | Potential Annual Savings (vs. £0 Excess) | Your Contribution at Claim Time |
|---|---|---|---|
| £0 | £95 | £0 | £0 |
| £100 | £88 | £84 | £100 |
| £250 | £75 | £240 | £250 |
| £500 | £62 | £396 | £500 |
| £1,000 | £50 | £540 | £1,000 |
As the table clearly shows, increasing your excess from £0 to £1,000 could almost halve your monthly premium, saving you over £500 a year. (illustrative estimate)
This cost reduction happens for two main reasons:
- Reduced Insurer Risk: By taking on the first £1,000 of any claim, you significantly reduce the potential payout for the insurer.
- Fewer Small Claims: A high excess discourages claims for minor issues, consultations, or therapies that cost less than the excess amount. This reduces the insurer's administrative workload and costs.
The key is to strike a balance. A £1,000 excess is only a good idea if you have £1,000 in savings readily available should you need to use your policy. (illustrative estimate)
Choosing the Right Excess Level for Your Needs
There is no "one-size-fits-all" answer. The right excess for you depends on a careful evaluation of your personal and financial situation.
Here are the key factors to consider:
- Your Monthly Budget: How much can you comfortably set aside for your premium each month? A higher excess will give you more breathing room in your regular budget.
- Your Savings (illustrative): Do you have an emergency fund? You must be able to cover your excess without causing financial hardship. Never choose a £1,000 excess if you don't have that amount saved and accessible.
- Your Health and Risk Profile:
- Young and Healthy (illustrative): If you're fit, active, and have no major health concerns, a higher excess (£500-£1,000) can be a very sensible way to get affordable cover, primarily for unexpected accidents or serious illness.
- Older or with a Family (illustrative): If you anticipate needing to use the policy more often, or want to ensure predictable costs for your family, a lower excess (£100-£250) might provide better peace of mind, even with a higher premium.
- Your Attitude to Risk:
- Risk-Averse (illustrative): If you dislike financial surprises and prefer predictable costs, a low excess (£0 or £100) is your best bet. You'll pay more monthly but will have little or nothing to pay when you claim.
- Comfortable with Risk: If you prefer lower fixed costs and are happy to self-insure for the initial part of a claim, a higher excess is a great strategy.
Real-World Scenarios
Let's look at how different people might choose their excess:
-
Chloe, 29, a freelance graphic designer (illustrative): Chloe is healthy and active. Her income can fluctuate, so keeping fixed monthly outgoings low is a priority. She has £2,000 in an emergency fund.
- Her Choice (illustrative): A £1,000 excess. This gives her the lowest possible premium. She sees her PMI as a safety net for serious issues like a major injury or an illness requiring surgery, not for minor therapies. She is confident she can pay the £1,000 if needed.
-
The Sharma Family (Ages 42, 40, 10, 8): The Sharmas want to ensure their children can be seen quickly if something happens. They have a stable joint income and some savings but don't want to face a huge bill unexpectedly.
- Their Choice (illustrative): A £250 excess per person, per year. This is a good middle ground. The premium is manageable, and a £250 bill per person is an affordable amount for them if someone needs treatment.
-
Robert, 67, retired: Robert is in good health but is more aware of potential health issues as he gets older. He has a fixed pension income but also significant savings. His main priority is certainty and no large, unexpected costs.
- His Choice (illustrative): A £100 excess. He is willing to pay a higher monthly premium for the peace of mind that his maximum out-of-pocket cost for any treatment will be just £100.
Critical Information: What UK Private Health Insurance Does NOT Cover
It is essential to understand the limits of private medical insurance in the UK. PMI is not a replacement for the NHS; it is a supplementary service designed to work alongside it.
Standard UK PMI policies are designed to cover acute conditions that arise after you take out your policy.
An acute condition is a disease, illness, or injury that is likely to respond quickly to treatment and lead to a full recovery. Examples include cataracts, joint replacements, hernias, and most types of cancer.
The main exclusions on virtually all standard PMI policies are:
- Chronic Conditions: These are long-term, incurable conditions that require ongoing management rather than a cure. Your GP and the NHS will continue to manage these. Examples include:
- Diabetes
- Asthma
- Hypertension (high blood pressure)
- Crohn's disease
- Arthritis
- Eczema
- Pre-existing Conditions: Any medical condition, symptom, or illness you had (or sought advice for) before your policy started is typically excluded. Insurers manage this through:
- Moratorium Underwriting: Automatically excludes any condition you've had in the 5 years before joining. However, if you go 2 full years on the policy without any symptoms, treatment, or advice for that condition, it may become eligible for cover.
- Full Medical Underwriting: You declare your full medical history upfront. The insurer then states precisely what is excluded from day one.
- Other Standard Exclusions: Routine pregnancy and childbirth, cosmetic surgery (unless for reconstructive purposes after an accident), treatment for addiction, and self-inflicted injuries.
Other Key Factors That Affect Your PMI Premium
While the excess is a major lever, several other factors combine to determine your final premium:
| Factor | Impact on Premium | Why? |
|---|---|---|
| Age | High | The risk of illness and needing treatment increases significantly as you get older. |
| Location | Medium-High | Private hospital costs vary by region. Central London has the most expensive facilities, leading to higher premiums for residents. |
| Medical History & Lifestyle | Medium | Smokers pay more. Your Body Mass Index (BMI) and general health can also influence the cost. |
| Level of Cover | High | A basic policy covering only in-patient treatment will be cheaper than a comprehensive one that includes out-patient diagnostics, therapies, and mental health support. |
| Hospital List | Medium | Policies with a limited list of local hospitals are cheaper than those offering a nationwide network including premium London hospitals. |
| No-Claims Discount | Medium | Many insurers offer a discount for every year you don't make a claim, which can reduce your premium at renewal. |
Working with an independent broker like WeCovr is invaluable here. Our experts can compare policies from across the market, helping you tweak these different factors to build a plan that gives you the best possible cover for your specific budget.
Proactive Health: A Smart Way to Manage Your Wellbeing
While insurance is there for when things go wrong, the best strategy is to stay healthy in the first place. A proactive approach to your wellbeing not only improves your quality of life but can also help keep your insurance costs down over the long term by reducing claims.
- Nourish Your Body: Aim for a balanced diet rich in fruits, vegetables, lean proteins, and whole grains. Staying hydrated is equally important.
- Stay Active: The NHS recommends at least 150 minutes of moderate-intensity activity (like brisk walking or cycling) or 75 minutes of vigorous-intensity activity (like running or tennis) a week.
- Prioritise Sleep: Aim for 7-9 hours of quality sleep per night. Good sleep is fundamental to both physical and mental health, aiding recovery and reducing stress.
- Manage Stress: Chronic stress can negatively impact your health. Practices like mindfulness, meditation, yoga, or simply spending time in nature can make a huge difference.
To support our clients on their health journey, WeCovr provides complimentary access to CalorieHero, our AI-powered calorie and nutrition tracking app, for all private medical insurance customers. It's a simple, effective tool to help you make healthier choices every day. Furthermore, clients who purchase PMI or Life Insurance through us can often access discounts on other types of cover, adding even more value.
Frequently Asked Questions (FAQs)
Can I change my private health insurance excess?
What happens if my treatment costs less than my excess?
Does UK private health insurance cover pre-existing or chronic conditions?
Understanding your excess is the first step towards finding a private medical insurance policy that truly works for you. It’s about finding the sweet spot between an affordable monthly premium and a potential one-off cost you are comfortable with.
Ready to find the right balance for your budget and needs? Get a free, no-obligation quote from WeCovr today. Our expert, experienced advisers will compare the UK's leading insurers to find the perfect private health cover for you, at no cost for our advice.
Sources
- Office for National Statistics (ONS): Mortality, earnings, and household statistics.
- Financial Conduct Authority (FCA): Insurance and consumer protection guidance.
- Association of British Insurers (ABI): Life insurance and protection market publications.
- HMRC: Tax treatment guidance for relevant protection and benefits products.
