While they may sound similar, they work in very different ways. So let’s take a look at what each option covers, how much they cost and which one might suit you best.
What is private health insurance?
Private health insurance (often called private medical insurance or PMI) is designed to cover the cost of eligible private medical treatment. You pay a monthly or annual premium and, in return, your insurer pays for treatment when you need it, subject to your policy terms.
It is typically used to access faster diagnosis and treatment for new conditions and injuries that develop after your policy starts. PMI does not replace the NHS but runs alongside it, giving you an alternative route for planned care.
What does private health insurance cover?
Most policies cover treatment for short-term or acute conditions, which are illnesses or injuries that can be treated and resolved. This can include specialist consultations, diagnostic scans, private hospital treatment and cancer care.
As an example, a health insurance policy may cover the following:
Outpatient appointments before treatment.
Hospital treatment.
Cancer cover.
Remote GP access.
Mental health support.
Private ambulance transport where medically necessary.
Diagnostic tests before and after treatment.
Scans before and after treatment (MRI, CT and PET).
Treatment at home, such as chemotherapy.
Outpatient therapies.
Home nursing.
At the same time, it is important to be aware of exclusions, which vary between providers. The most common one is pre-existing conditions, meaning health issues you had before your policy started that require ongoing treatment.
Other exclusions often include routine maternity care, conditions linked to ageing, menopause or puberty, as well as allergies and food intolerances. Emergency treatment is still handled by the NHS.
What is included and excluded will vary between providers, so it’s always worth checking the detail carefully before you choose a policy.
How much does private health insurance cost?
The cost of private health insurance varies depending on your age, where you live and the level of cover you choose.
As an example, one leading UK insurer shows that a healthy 40-year-old living in Lancashire might pay around £45 per month for comprehensive cover, rising to approximately £102 per month for a 60-year-old.
Another leading insurer offers comprehensive cover for a 40-year-old at £50.30, but if they take off mental health and cancer cover, the premium drops to just £36.92 a month.
The amount you are offered will depend on your personal circumstances and the choices you make for your cover. This is because several key factors influence the price you pay:
Age: Premiums typically increase as you get older.
Location: Living in areas with higher private healthcare costs, such as London, can push premiums up.
Level of cover: More comprehensive policies with comprehensive outpatient care will cost more.
Optional extras: Adding benefits such as dental can raise premiums.
Excess: Choosing a higher excess can reduce your monthly premium.
Hospital list: Access to a wider network of hospitals can increase the cost.
How often you pay: Some insurers charge more for monthly payments, while offering a discount if you choose to pay annually.
What is a health cash plan?
A health cash plan is a more budget-friendly way to help manage everyday healthcare costs. Instead of covering major treatment, it pays you back a set amount towards routine health expenses.
You pay a monthly premium and when you use eligible services you can claim back part or all of the cost up to your annual limit.
To claim back costs for eligible medical expenses, you’ll usually need to keep your receipts or relevant paperwork and submit them to your cash plan provider. The amount you can reclaim will depend on the terms of your policy and the benefit limits that apply to your plan.
What does a health cash plan cover?
Health cash plans are designed to help with the cost of routine everyday healthcare rather than major medical treatment. They allow you to claim back certain amounts, up to the limits set by your policy, towards common services such as:
Dental care.
Optical costs.
Prescriptions.
A range of therapies.
Hospital stay benefits.
Alongside these cash benefits, plans often include access to additional digital and wellbeing services, which might include:
Unlimited 24/7 online GP access.
24/7 mental health support and counselling.
Digital muscle and joint pain assessments, helping you quickly understand symptoms and access the right support for musculoskeletal issues.
Digital skin cancer screening (adult only), allowing you to scan a skin spot and receive a fast assessment and recommendation, helping identify signs of common skin cancers early.
Digital physiotherapy assessment and support (adult only), providing rapid assessment of musculoskeletal conditions with guidance on treatment or self-management where appropriate.
Digital dentistry (adult only), giving on-demand access to a registered dentist for advice, reassurance and in some cases private electronic prescriptions.
Digital eye screening (adult only), offering an online test covering vision, astigmatism, visual fields, contrast sensitivity, colour vision and depth perception to give an indication of eye health.
Lifestyle advice and guidance.
These features are designed to support everyday health and wellbeing, helping you manage minor issues quickly while still relying on the NHS or private healthcare for more serious treatment.
How much does a health cash plan cost?
Health cash plans are generally cheaper than private health insurance, making them a popular option for covering routine healthcare costs. Plans can start from under £10 a month for basic cover, rising to around £50 a month for premium plans with higher cash payouts.
Wondering what level of cover a plan could get you? As an example, one leading provider offers the following for £22 per month:
Up to £110 towards dental treatment.
Up to £100 towards optical costs.
Up to £150 for physiotherapy, osteopathy, chiropractic treatment and acupuncture.
Up to £100 for podiatry and reflexology.
£30 towards NHS or private prescriptions.
Up to £400 for hospital stays (£20 per day for up to 20 days).
Access to their digital services including unlimited 24/7 online GP access, mental health support and counselling and muscle and joint pain assessments.
Choosing a higher monthly premium will typically increase these benefit limits, allowing you to claim more across each category.
It is also worth bearing in mind that there health cash plans are available that include children at no extra cost, which can offer meaningful savings for families.
Health insurance vs health cash plans: a direct comparison
Here’s a quick comparison of the two options, followed by more information on the differences.
Comparing health insurance and health cash plans | ||
|---|---|---|
Factor | Health insurance | Health cash plan |
Cost | Higher mo0nthly premiums depending on cover. | Typically lower monthly cost depending on what level you choose. |
Coverage | Private hospital treatment, diagnostics, specialist care, cancer diagnosis and treatment, mental health cover. | Everyday healthcare costs such as dental and optical. |
Claims process | Insurer usually pays provider directly. | You pay first then claim back. |
Flexibility | Wide choice of hospitals and consultants, depending on your policy and hospital list selected | You choose where to receive treatment, with claims limited to fixed benefit allowances set out in your plan |
Best suited for | People who want cover for unexpected illness or injury, including hospital treatment, specialist care and surgery, with protection against larger medical bills. | People who want help with everyday healthcare costs such as dental, optical and routine treatments, rather than major medical cover. |
Cost and premiums
Health insurance is generally a higher financial commitment due to the more comprehensive coverage. Health cash plans are often cheaper, making them more accessible for covering routine healthcare expenses rather than large medical bills.
What each product covers
Private health insurance focuses on new, unexpected medical conditions and injuries that require diagnosis, treatment or surgery, often providing cover for consultations, scans and hospital care. Health cash plans, by contrast, are designed to help with everyday healthcare costs such as dental treatment, eye tests and physiotherapy.
Many cash plans also include a hospital stay benefit, which provides a set daily payment if you are admitted to hospital, say £20 a day. This is not designed to cover the cost of treatment, but rather to help with incidental expenses while you are staying in hospital, such as travel, parking or general day-to-day costs.
How claims work
With private health insurance, approved treatment is usually paid directly by the insurer to the hospital or provider. With cash plans, you typically pay your bill, keep your receipt and then submit a claim to be reimbursed up to your benefit limit.
Who each product suits
Private health insurance tends to suit people who want financial protection against the cost of more serious or unexpected medical conditions, including hospital treatment, specialist consultations and surgery, along with quicker access to diagnosis and care. It is often chosen by those who are comfortable paying a higher monthly premium in exchange for cover against larger, less predictable medical bills.
Health cash plans are often better suited to people who want help managing everyday healthcare costs such as dental care, optical check-ups and routine treatments. They typically appeal to those looking for a more affordable way to budget for regular health expenses, rather than cover major medical treatment or hospital care.
Can you have both health insurance and a cash plan?
Yes, you might choose to use both products together as they serve different purposes. A health cash plan can help cover everyday healthcare costs such as dental treatment or prescriptions. Your private health insurance provides protection for health conditions and injuries that require tests, scans, surgery or other hospital treatment.
Is it worth having both?
For some people yes. Having both can help spread healthcare costs more evenly and reduce out-of-pocket spending on routine care while still protecting against larger unexpected medical bills. However, it depends on your budget and how often you use healthcare services.
Which is right for you?
The right choice depends on your needs, your budget and how you prefer to manage healthcare costs.
Choose health insurance if...
You want cover for private hospital treatment.
You are concerned about large unexpected medical bills.
You want faster access to diagnosis and specialist care.
Choose a health cash plan if...
You mainly want help with everyday healthcare costs.
You are looking for a lower monthly premium.
You do not need cover for major medical treatment.
Frequently asked questions
What is the difference between health insurance and a health cash plan?
Health insurance covers the cost of private medical treatment such as surgery, hospital stays, scans and diagnostics, while a health cash plan reimburses everyday healthcare costs like dental care, optical checks and physiotherapy.
Is a health cash plan worth it?
A health cash plan can be good value if you regularly use routine healthcare services such as dental or eye care. It helps spread costs over the year, although it will not cover major medical treatment.
Does a health cash plan replace private health insurance?
No, a health cash plan does not replace private health insurance. It only helps with everyday healthcare costs and does not cover hospital treatment or surgery.
Can I claim on a health cash plan and the NHS?
Yes, you can still use NHS services and claim on a health cash plan for eligible expenses, such as prescription charges. The plan is designed to help with out-of-pocket costs rather than replace NHS care.
Do health cash plans cover pre-existing conditions?
Yes, health cash plans pay benefits regardless of pre-existing conditions because they focus on helping with the costs of routine healthcare services. However, what you can claim for and the level of benefit available will depend on the provider and policy limits, so it is always important to check the terms carefully.
