Private Health Insurance Excess How to Choose the Right Amount
At WeCovr, an FCA-authorised broker that has helped arrange over 800,000 policies, we know that navigating private medical insurance in the UK can feel complex. One of the most critical decisions you'll make is choosing your excess, a choice that directly impacts both your premiums and potential future costs.
Strategic guide to selecting excess levels that balance premium costs with out-of-pocket risk, including calculation tools and real-world examples
Choosing the right excess on your private health insurance policy is a balancing act. Set it too high, and a claim could strain your finances. Set it too low, and you could be paying hundreds of pounds more in premiums each year for no reason.
This guide is designed to demystify the process. We'll provide you with a strategic framework, clear examples, and the expert insights you need to select an excess level that perfectly aligns with your budget, your health, and your peace of mind.
What is an Excess in Private Health Insurance?
In the simplest terms, an excess (also known as a deductible) is the amount of money you agree to pay towards the cost of your treatment when you make a claim. The insurer then pays the remaining balance, up to your policy limits.
Think of it like the excess on your car insurance. If you have a £500 excess and the repair bill is £3,000, you pay the first £500, and your insurer covers the remaining £2,500.
It's a way for you to share a small portion of the risk with the insurer. Crucially, you only pay the excess if and when you make a claim. If you never claim on your policy, you never have to pay the excess.
How the Excess Level Affects Your PMI Premiums
The relationship between your excess and your premium is simple and direct:
A higher excess will result in a lower monthly or annual premium. A lower excess will result in a higher monthly or annual premium.
Why? By choosing a higher excess, you are agreeing to take on a larger portion of the initial cost of any potential treatment. This reduces the financial risk for the insurance company, and they pass those savings on to you in the form of lower premiums.
The impact can be significant. Let's look at how changing your excess could affect your premiums.
| Excess Amount | Example Monthly Premium | Approximate Annual Saving (vs. £0 Excess) |
|---|---|---|
| £0 | £95 | £0 |
| £100 | £88 | £84 |
| £250 | £79 | £192 |
| £500 | £68 | £324 |
| £1,000 | £55 | £480 |
Note: These figures are for illustrative purposes only. Your actual premiums and savings will depend on your age, location, chosen cover, and insurer.
As you can see, opting for a £500 excess instead of a £0 excess could save you over £300 a year. Choosing a £1,000 excess could save you nearly £500. This is a powerful tool for making comprehensive private health cover more affordable.
Types of Health Insurance Excess Explained
This is one of the most important details to understand, as it dramatically changes how your excess works in practice. There are two main types of excess offered by UK PMI providers.
1. Per Claim / Per Condition Excess
With this type, you must pay the excess for each separate medical condition you claim for within a single policy year.
- How it works: You claim for a new, unrelated condition, you pay the excess. If you claim for another new condition later in the same year, you pay the excess again. However, all follow-up treatment for the same condition will be covered without you needing to pay the excess again.
- Example:
- Sarah has a £250 per claim excess.
- In March, she has physiotherapy for a bad back. The total cost is £1,200. She pays the first £250, and her insurer pays the remaining £950.
- In September, she develops a separate issue and needs to see a dermatologist. The consultation and tests cost £800. She must pay the £250 excess again, and her insurer pays the remaining £550.
- Total excess paid in the year: £500.
2. Per Policy Year Excess
With this type, you pay the excess only once per policy year, no matter how many claims you make for different, unrelated conditions.
- How it works: You pay the excess towards the cost of your first claim of the policy year. Once that excess amount is met, all subsequent eligible claims for the rest of that year are covered in full (up to your policy limits) without you paying any further excess.
- Example:
- David has a £500 per policy year excess.
- In March, he has knee surgery costing £6,000. He pays the first £500, and his insurer pays the remaining £5,500. His annual excess is now fully paid.
- In September, he needs specialist consultations for a separate condition, costing £1,500. Because he has already met his annual excess, he pays £0. The insurer covers the full £1,500.
- Total excess paid in the year: £500.
Comparison: Per Claim vs. Per Year
| Feature | Per Claim / Per Condition Excess | Per Policy Year Excess |
|---|---|---|
| When you pay | Every time you claim for a new, unrelated condition. | Only once per policy year, on your first claim(s). |
| Best for | Individuals who anticipate making, at most, one claim per year. | Those who want certainty over their maximum annual out-of-pocket costs, especially families. |
| Potential Risk | Costs can mount up if you are unlucky and need to claim for multiple separate conditions in one year. | The excess amount itself is often slightly higher than the 'per claim' equivalent for a similar premium. |
An expert PMI broker like WeCovr can help you compare policies from different insurers, clearly highlighting which type of excess they offer so you can make an informed choice.
A Strategic Framework for Choosing Your Excess
Don't just pick a number at random. Follow this four-step process to find the sweet spot between premium savings and financial risk.
Step 1: Assess Your Financial Buffer
This is the most important question: How much could you comfortably afford to pay at short notice for medical treatment without it causing financial distress?
- Look at your emergency savings. This is the pot of money you should plan to use for an excess payment.
- Be honest with yourself. If paying £1,000 tomorrow would be a major problem, do not choose a £1,000 excess, no matter how low the premium is.
- A good rule of thumb is to choose an excess amount that you have readily available in savings.
Step 2: Evaluate Your Health and Risk Profile
Consider your personal circumstances.
- Age and General Health: If you are young, fit, and healthy with no significant medical history, your risk of claiming is statistically lower. You might feel more comfortable with a higher excess to maximise your premium savings.
- Lifestyle: Do you play contact sports or have a hobby that carries a risk of injury? This might slightly increase your chances of needing to claim.
- Family History: While not a direct indicator, a family history of certain acute conditions might influence your thinking.
A Critical Reminder on What PMI Covers: It's vital to remember that standard UK private medical insurance is 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.
PMI does not cover:
- Pre-existing conditions: Any medical condition you had symptoms of, or received advice or treatment for, before your policy started.
- Chronic conditions: Conditions that require long-term management rather than a cure, such as diabetes, asthma, or high blood pressure.
Step 3: Calculate the 'Break-Even' Point
This is a powerful way to quantify your decision. The break-even point tells you how many claim-free years you need for the premium savings to 'pay for' your excess.
The Formula: Break-Even (in years) = Excess Amount / Annual Premium Saving
Let's use our example from earlier:
- Policy with £0 Excess: £95/month
- Policy with £500 Excess: £68/month
-
Calculate the Annual Saving: (£95 - £68) x 12 months = £27 x 12 = £324
-
Calculate the Break-Even Point: £500 (Excess Amount) / £324 (Annual Saving) = 1.54 years
The Insight: In this scenario, if you go just over 18 months without making a claim, you have already saved more in premiums than the cost of the excess. If you believe you are likely to go two, three, or more years without needing to claim, the higher excess is financially the smarter choice.
Step 4: Consider Your Family's Needs
If you're taking out a policy for a couple or a family, your considerations change slightly.
- Increased Likelihood of a Claim: With more people on the policy (especially children), the statistical chance of someone needing treatment in any given year increases.
- Excess Per Person or Per Policy? Check the insurer's terms. Some apply the excess per person, while others apply it just once for the whole policy per year. A 'per policy' excess is often more favourable for families.
- A 'per policy year' excess is often highly recommended for families. It provides a cap on your total out-of-pocket costs for a given year, offering valuable budget certainty.
Real-World Scenarios: Choosing the Right Excess
Let's apply our framework to a few different people.
Scenario 1: Aisha, the Young Professional
- Who: Aisha, 28, a marketing consultant living in Manchester.
- Health & Finances: She is fit and healthy, goes to the gym regularly, and has over £5,000 in an emergency savings account.
- Goal: She wants PMI for peace of mind and to bypass long NHS waiting lists for any potential issues, but wants to keep her monthly outgoings low.
- Her Choice: £1,000 excess.
- Rationale: Aisha calculates her break-even point and sees that she'll save nearly £500 a year on premiums compared to a £0 excess policy. She is confident in her health and knows she can easily cover the £1,000 if she ever needs to claim. For her, the significant premium saving is worth the risk.
Scenario 2: The Patels, the Young Family
- Who: The Patel family, a couple in their late 30s with two children aged 6 and 9.
- Health & Finances: Everyone is generally healthy, but the kids are very active in sports. Their budget is comfortable but they like predictable costs.
- Goal: They want fast access to specialists for their children (e.g., ENT specialists for ear infections, orthopaedics for sports injuries) without facing multiple unexpected bills.
- Their Choice: £250 per policy year excess.
- Rationale: They reject a 'per claim' excess because they could face two or three separate claims in a year between the four of them (e.g., a broken arm for one child, tonsillitis for another). A 'per policy year' excess means they know their maximum liability is just £250 for the entire year. It offers a great balance between affordable premiums and cost-control.
Scenario 3: Robert, the Pre-Retiree
- Who: Robert, 59, an accountant planning to retire in a few years.
- Health & Finances: He is in good health but is more risk-averse. He wants to ensure that any health issues that arise are dealt with quickly and with minimal fuss or cost. His savings are earmarked for retirement.
- Goal: Maximum peace of mind and minimal out-of-pocket expenses during a claim.
- His Choice: £100 or £0 excess.
- Rationale: Robert is willing to pay a higher premium for the security of knowing that if he needs treatment, his financial outlay will be negligible. For him, the primary value of insurance is removing financial uncertainty, so a low excess is the logical choice.
How WeCovr Can Help You Find the Perfect Balance
Understanding these options is the first step, but applying them to the dozens of policies on the market can be overwhelming. This is where using an independent, expert broker like WeCovr makes all the difference.
- Expert Guidance: Our specialists live and breathe the private medical insurance UK market. We can explain the nuances of each insurer's excess options in plain English.
- Market Comparison: We compare leading UK providers to find the policy that best fits your specific needs and budget, whether you're a young professional like Aisha or a family like the Patels.
- No Cost to You: Our brokerage and advice service is completely free for you to use. We are paid by the insurer only if you decide to proceed with a policy.
- High Customer Satisfaction: We pride ourselves on our transparent, client-focused approach, which is reflected in our high customer satisfaction ratings.
As a WeCovr client, you also get complimentary access to our AI-powered nutrition app, CalorieHero, to support your health goals, and exclusive discounts on other policies like life or home insurance.
Beyond the Excess: Other Ways to Manage Your PMI Costs
Your excess is the biggest lever you can pull to control your premium, but it's not the only one. Consider these other options when tailoring your policy:
- The '6-Week Wait' Option: This is a popular way to reduce premiums by 20-30%. With this option, if the NHS can provide the inpatient treatment you need within six weeks of it being recommended, you will use the NHS. If the waiting list is longer than six weeks, your private policy kicks in.
- Hospital Lists: Insurers have different tiers of hospitals. Choosing a policy that uses a more limited, nationwide network of quality private hospitals (rather than one including expensive central London hospitals) can significantly lower your premium without a major drop in quality.
- Outpatient Cover Limits: You can choose to limit the amount of cover for consultations, diagnostic tests, and scans that don't require a hospital bed. A lower limit (e.g., £500 or £1,000) will reduce your premium.
- Embrace Wellness: A healthy lifestyle is your best long-term investment. Many leading PMI providers now offer fantastic rewards for staying active, from free coffee and cinema tickets to discounted gym memberships and even lower renewal premiums. Focusing on a balanced diet, regular physical activity, quality sleep (7-9 hours for most adults), and managing stress not only improves your life but can also make your insurance cheaper.
By combining a well-chosen excess with one or more of these options, you can build a powerful yet affordable private health cover plan.
What happens if my private treatment costs less than my excess?
Can I change my excess amount after I've bought the policy?
Does UK private health insurance cover pre-existing or chronic conditions?
Choosing the right private medical insurance is a significant decision. The excess is a key component that puts you in control of the trade-off between monthly cost and potential risk. By using the framework in this guide, you can move forward with confidence.
Ready to find the perfect balance for your needs? The expert team at WeCovr is here to help. Get a free, no-obligation quote today and let us compare the UK's leading insurers to find a policy that protects your health and your wallet.
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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