What is private medical insurance?
Private medical insurance pays for the diagnosis and treatment of acute conditions that start after your policy begins. It is designed to sit alongside the NHS, not replace it.
Emergency care, chronic condition management and pre-existing conditions generally remain with the NHS.
How a policy works in practice
You see your GP, get a referral, then call your insurer for authorisation before booking a consultant. Treatment happens at a hospital within your chosen network.
You pay the excess, the insurer pays the rest up to the policy limits. Claims usually push next year's premium up unless you hold a no-claims discount protection.
Worked example
A 40-year-old non-smoker on a mid-range plan with a £500 excess and a guided hospital list typically pays £55-£85 a month.
Moving to a £250 excess and a full national hospital list on the same plan often adds 30-45% to that premium.
Levels of cover
Diagnostic only
Covers tests, scans and consultations, then hands treatment back to the NHS. The cheapest way in.
Treatment cover
Adds inpatient and day-patient surgery, the core of most policies.
Comprehensive
Adds outpatient limits, therapies, mental health and sometimes dental and optical.
Cash plans
Not insurance in the same sense — fixed cash payouts towards everyday dental, optical and physio costs.
Who private cover suits
The value depends on what you want to avoid waiting for.
- 1
Self-employed people
Where a long wait for a scan directly costs earnings.
- 2
Small employers
Group schemes are cheaper per head and count as a taxable benefit in kind.
- 3
Families
Child cover is usually inexpensive when added to a parent's policy.
- 4
Over 55s
Premiums rise steeply, so lock in early if you plan to hold cover long term.
Underwriting explained
How your medical history is treated decides what you can claim for.
Moratorium: No forms up front. Conditions from the last five years are excluded until you go two years symptom and treatment free.
Full medical underwriting: You disclose history at the outset and get a clear list of exclusions in writing.
Switch cover: Moving insurer while keeping existing terms, subject to the new insurer accepting them.
Chronic conditions: Asthma, diabetes and similar ongoing conditions are excluded by design on every insurer.
How to compare health insurance
Two policies at the same price can differ enormously.
- 1
Hospital list
Guided or local lists cut the premium; central London lists raise it sharply.
- 2
Outpatient limit
A £1,000 cap sounds fine until a scan and three consultations use most of it.
- 3
Excess type
Per policy year is better value than per claim.
- 4
Mental health cover
Limits vary hugely and this is where cheaper plans quietly cut back.
Pros and cons of private cover
Pros
- Fast access to diagnostics and consultants
- Choice of hospital and appointment timing
- Private room and named consultant for surgery
- Employer schemes can be very cost effective per head
Cons
- Pre-existing and chronic conditions are excluded
- Premiums rise every year with age and claims
- Emergency care still goes through the NHS
Why premiums rise each year
Two forces stack up: medical inflation, which runs well above general inflation, and your own age band moving up at each renewal.
Claiming also matters. Most insurers apply a no-claims scale similar to motor cover, so a single outpatient claim can move you several steps.
What is not covered
Accident and emergency, pregnancy and childbirth, cosmetic surgery, and chronic condition management are excluded on standard policies.
Treatment started before authorisation is frequently refused, even where the condition itself was covered.
Alternatives and cheaper routes
If a full policy is out of budget, there are middle options.
Six-week NHS wait option
Cover only kicks in if the NHS cannot treat you within six weeks. It can cut the premium by 20-30%.
Health cash plans
Low monthly cost for everyday dental, optical and physiotherapy contributions.
Self-pay diagnostics
Paying directly for a scan or consultation can be cheaper than a year of premiums for one-off needs.
FAQs
About this guide
Written and reviewed by the Grow Your Business team, and kept up to date as rates, rules and provider terms change.
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