Understanding Your PMI Policy Excess Choosing the Right Amount
As an FCA-authorised broker that has helped arrange over 800,000 policies, we at WeCovr know that choosing private medical insurance in the UK can feel complex. One of the most critical decisions you'll make is selecting your policy excess, a choice that directly impacts both your monthly premium and potential future costs. This guide will demystify the PMI excess, empowering you to find the perfect balance.
How to balance premiums with out-of-pocket costs for different excess levels
Choosing the right excess for your private medical insurance (PMI) is a balancing act. It's about weighing a lower monthly premium against the amount you're comfortable paying out-of-pocket if you need to make a claim. A higher excess means lower monthly payments, but a bigger bill when you need treatment. A lower excess provides more peace of mind at claim time but results in higher ongoing premiums.
The key is to find a sweet spot that suits your personal financial situation, your health, and your attitude towards risk. This comprehensive guide will walk you through everything you need to know to make an informed and confident decision.
What Exactly is a PMI Policy Excess?
In simple terms, an excess (sometimes called a deductible) is the fixed amount of money you agree to pay towards the cost of your private medical treatment before your insurance provider starts paying.
Think of it like your car insurance excess. If you have a £250 excess on your car insurance and you have an accident that costs £1,000 to repair, you pay the first £250, and your insurer pays the remaining £750.
A private health cover excess works in the same way. If your policy has a £500 excess and you need a procedure that costs £4,000, you would pay the first £500 to the hospital or specialist, and your insurer would cover the remaining £3,500, up to your policy limits.
It’s a form of cost-sharing between you and the insurer. By agreeing to pay a portion of the costs, you reduce the insurer's financial risk, and they reward you with a lower premium.
How Does a PMI Excess Work in Practice? A Step-by-Step Example
Let's imagine a scenario to see how the excess functions in a real-life situation.
Meet Sarah, a 40-year-old graphic designer with a PMI policy.
- Policy: Sarah has a comprehensive private medical insurance policy with Bupa.
- Excess: She chose a £250 excess per policy year.
- The Issue: Sarah develops persistent knee pain and her GP refers her to a specialist.
Here’s how her claim journey unfolds:
- GP Referral: Sarah visits her NHS GP, who recommends seeing an orthopaedic consultant.
- Contact Insurer: Sarah calls her PMI provider, Bupa, to get pre-authorisation for the consultation. They confirm her policy covers this and give her a choice of approved specialists.
- Initial Consultation: Sarah sees the private consultant. The consultation fee is £200. Since this is her first claim of the policy year, it goes towards her £250 excess. Sarah pays the £200 bill herself. Her remaining excess for the year is now £50.
- Diagnostic Scans: The consultant recommends an MRI scan to diagnose the problem. The scan costs £750.
- Paying for the Scan: The first £50 of the MRI cost is covered by Sarah, which clears her remaining excess for the year. Her insurer, Bupa, pays the remaining £700 directly to the hospital.
- Further Treatment: The MRI reveals a torn meniscus requiring keyhole surgery (arthroscopy). The total cost for the surgery, including surgeon and anaesthetist fees and the hospital stay, is £3,800.
- Insurer Covers the Cost: Because Sarah has already paid her full £250 excess for the policy year, Bupa covers the entire £3,800 cost of the surgery.
- Physiotherapy: Her policy also includes post-operative physiotherapy. She has six sessions, costing a total of £360. Again, Bupa covers this in full as her annual excess has been met.
Total Cost of Treatment: £5,110 (£200 + £750 + £3,800 + £360) Sarah Paid: £250 (her annual excess) Bupa Paid: £4,860
This example clearly shows how the excess works. Once paid, the insurer takes over for all eligible treatment for the rest of the policy year.
The Core Relationship: Excess vs. Premium
The relationship between your excess and your premium is an inverse one. It’s a simple trade-off:
- Higher Excess = Lower Premium: You take on more financial risk, so the insurer charges you less each month.
- Lower Excess = Higher Premium: The insurer takes on more financial risk, so they charge you more each month.
This "seesaw" effect is one of the most powerful tools you have for customising a policy to fit your budget.
Let's look at how the monthly premium for a hypothetical 45-year-old non-smoker in London might change based on the excess level.
| Excess Amount | Estimated Monthly Premium | Potential Annual Saving (vs. £0 Excess) |
|---|---|---|
| £0 | £95 | £0 |
| £100 | £88 | £84 |
| £250 | £78 | £204 |
| £500 | £65 | £360 |
| £1,000 | £52 | £516 |
Disclaimer: These figures are for illustrative purposes only. Your actual premium will depend on your age, location, health, and chosen cover level.
As you can see, increasing your excess from £0 to £500 could save you £30 a month, or £360 a year. Opting for a £1,000 excess could more than halve your annual premium compared to a zero-excess option. This is a significant saving that makes private health cover much more accessible.
Choosing Your Excess: A Personal Calculation
There's no single "best" excess amount—it's a deeply personal choice. Here are the key factors to consider when deciding what's right for you.
1. Your Financial Situation and Savings
This is the most important factor. Ask yourself:
"If I needed to make a claim tomorrow, could I comfortably pay the excess amount without causing financial hardship?"
- If you have healthy savings: You might be comfortable with a higher excess (£500, £1,000, or more). You can afford the one-off hit in exchange for significant long-term premium savings.
- If you're on a tighter budget or have limited savings: A lower excess (£100 or £250) might be more suitable. Your monthly payments will be higher, but you won't face a large, unexpected bill if you need treatment. A £0 excess offers complete peace of mind but comes at the highest premium.
2. Your Attitude to Risk
How do you feel about financial uncertainty?
- Risk-Averse: If the thought of a surprise £1,000 bill causes you stress, you'll likely sleep better with a low excess. The higher premium is the price you pay for predictability and peace of mind.
- Risk-Tolerant: If you're a calculated risk-taker and see the long-term premium savings as a worthwhile gamble, a high excess is a logical choice. You're betting that you'll remain healthy and won't need to claim often.
3. Your Age and Health Status
While PMI is for acute conditions that arise after you take out the policy, your general age and health can inform your decision.
- Young and Healthy: If you're in your 20s or 30s and generally fit and well, you may feel it's a safe bet to opt for a higher excess. Your likelihood of needing to claim is statistically lower.
- Older or More Concerned: As we age, the statistical likelihood of needing medical intervention increases. If you're in your 50s, 60s, or beyond, you might favour a lower excess, anticipating a higher chance of needing to use your policy.
4. Family vs. Individual Policies
The way the excess is applied can differ for family policies. Some insurers apply the excess:
- Per person: Each family member who claims must satisfy their own excess.
- Once for the whole policy: Once one family member has paid the excess, it is considered met for everyone on the policy for that year.
Check the policy details carefully. If the excess applies per person, a high excess on a family policy could mean paying it multiple times in one year if several family members need treatment. In this case, a lower excess might be more manageable.
Per Claim vs. Per Year Excess: A Crucial Distinction
This is a vital detail that many people overlook. The way your excess is applied can make a huge difference to your potential out-of-pocket costs.
-
Excess Per Policy Year (More Common): You pay the excess only once per policy year, no matter how many separate claims you make for different conditions. This is the most common and generally more favourable option. Once you've paid it, all subsequent eligible claims in that year are covered in full.
-
Excess Per Claim/Condition (Less Common): You pay the excess for each new and unrelated condition you claim for. If you have a claim for a knee problem in January and a separate claim for a stomach issue in June, you would have to pay the excess twice.
Let's compare how this works.
| Scenario | With a £500 'Per Year' Excess | With a £500 'Per Claim' Excess |
|---|---|---|
| Claim 1 (Feb): Knee Surgery (£4,000) | You pay £500. Insurer pays £3,500. | You pay £500. Insurer pays £3,500. |
| Claim 2 (July): Cataract Surgery (£2,500) | You pay £0. Insurer pays £2,500. | You pay £500. Insurer pays £2,000. |
| Claim 3 (Nov): Hernia Repair (£3,000) | You pay £0. Insurer pays £3,000. | You pay £500. Insurer pays £2,500. |
| Total You Pay in a Year: | £500 | £1,500 |
Our Expert Advice: For most people, a "per policy year" excess offers better value and predictability. It protects you from the financial shock of having multiple, unrelated health issues in a single year. When comparing private medical insurance UK policies, always check this detail. An expert PMI broker like WeCovr will always clarify this for you, ensuring there are no nasty surprises.
A Critical Note: What Private Medical Insurance Doesn't Cover
It is essential to understand the fundamental purpose of private medical insurance in the UK.
PMI is 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 cataract, a hernia, a joint replacement).
Standard UK PMI policies do NOT cover:
- Chronic Conditions: These are long-term illnesses that cannot be cured, only managed (e.g., diabetes, asthma, high blood pressure, arthritis). Management for these conditions will remain under the care of the NHS.
- Pre-existing Conditions: Any medical condition you had symptoms of, received advice for, or were treated for in the years before your policy started (typically the last 5 years). Some policies may cover them again if you remain symptom- and treatment-free for a set period (usually 2 years) after your policy starts.
This is a cornerstone of how the UK PMI market works. Your excess applies to eligible claims for new, acute conditions.
Beyond the Excess: Adding Value to Your Health and Finances
A good PMI policy is more than just a safety net for surgery. Top providers, and brokers like us, add extra value to help you stay healthy in the first place.
Wellness and Preventative Health
The NHS is fantastic in a crisis, but preventative care can be stretched. Many PMI policies now include benefits aimed at keeping you well, such as:
- Digital GP Services: 24/7 access to a GP via phone or video call, helping you get advice quickly without waiting for an appointment.
- Mental Health Support: Access to counselling or therapy sessions, often without needing a GP referral. This is crucial, given that ONS data shows around 1 in 5 adults in Great Britain experienced some form of depression in early 2021.
- Health and Wellbeing Apps: Many insurers offer apps with fitness challenges, mindfulness guides, and health tracking.
At WeCovr, we enhance this by providing all our health and life insurance clients with complimentary access to CalorieHero, our AI-powered nutrition tracking app. Proper nutrition is a cornerstone of good health, helping to manage weight, improve energy levels, and reduce the risk of many future health problems.
Healthy Living Tips
- Diet: Aim for a balanced diet rich in fruit, vegetables, lean protein, and whole grains. Reducing processed foods, sugar, and saturated fats can have a huge impact on your long-term health.
- Sleep: Prioritise 7-9 hours of quality sleep per night. Poor sleep is linked to a range of health issues, including weakened immunity and poor mental health.
- Activity: The NHS recommends at least 150 minutes of moderate-intensity activity a week. This could be a brisk walk, a cycle ride, or a swim. Find something you enjoy to stay consistent.
Bundling Discounts
When you arrange your private health cover through a broker, you can often access other benefits. For instance, clients who purchase PMI or Life Insurance through WeCovr may be eligible for discounts on other types of cover, such as home or travel insurance, providing even greater value.
How an Expert PMI Broker Can Help
The UK PMI market is crowded with providers like Bupa, Aviva, AXA Health, and Vitality, all offering dozens of policy combinations. Trying to compare them all yourself can be overwhelming. This is where a broker comes in.
An independent and authorised PMI broker like WeCovr acts as your expert guide. Our service is provided at no cost to you.
- We Understand the Market: We know the ins and outs of every major policy, including how their excess options, co-payments, and benefit limits work.
- We Tailor to You: We take the time to understand your budget, health needs, and risk appetite to find the perfect balance of premium and excess. We can help you find the best PMI provider for your specific circumstances.
- We Save You Time and Money: We use our expertise and technology to compare the market for you, presenting you with clear, easy-to-understand options and potentially saving you hundreds of pounds a year.
- We Advocate for You: We work for you, not the insurance company. Our high customer satisfaction ratings are a testament to our client-first approach.
Choosing an excess is just one piece of the puzzle. A broker helps you see the whole picture, ensuring your private health cover is robust, affordable, and perfectly suited to you and your family.
Can I change my PMI excess amount after my policy has started?
What happens if my treatment cost is less than my excess?
Does choosing a higher excess affect the quality of care I receive?
Is a £0 excess policy ever a good idea?
Ready to find the perfect balance for your private medical insurance? Let our experts do the hard work for you.
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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