What is a health insurance premium?
Your health insurance premium is the amount you pay, usually monthly or annually, to keep your policy active. In return, your insurer agrees to cover some or all of the cost of private medical treatment, depending on your level of cover.
Premiums can vary significantly from person to person, which is why understanding what affects the price can help you find cover that fits both your needs and your budget.
What does your health insurance premium actually cover?
While cost is an important factor, it is equally important to understand what your premium provides.
Most policies will typically include access to specialist consultations, diagnostic tests such as scans, private hospital treatment including surgery, and cancer care. Many also include some level of mental health support, although the extent of this can vary.
For example, one leading insurer includes the following as part of its cover:
Outpatient appointments before treatment.
Hospital treatment.
Cancer cover.
Remote GP access.
Mental health cover.
Private ambulance.
NHS cash benefit.
Tests before and after treatment.
Scans before and after treatment (MRI, CT, PET).
Treatment at home, such as chemotherapy.
Outpatient therapies.
Home nursing.
At the same time, there are common exclusions to be aware of. These often include conditions or injuries you had before your policy started. Chronic conditions where ongoing treatment is needed are also often excluded, although cancer cover is often included as standard.
Other typical exclusions can include issues linked to ageing, menopause or puberty, along with allergies and food intolerances.
What is included and excluded can vary between policies, so it’s always worth checking the details before choosing your cover.
How are my health insurance premium costs calculated?
Health insurance is not one-size-fits-all. Insurers look at a range of factors when calculating your premium, all of which help determine how likely you are to claim and how much those claims might cost.
We’ll look in detail at the things that affect how much you pay, but here’s a summary:
Factors that affect health insurance premiums | ||
|---|---|---|
Factor | How it affects your premium | Example of impact |
Age | Premiums increase as you get older. | A policy at age 30 is typically much cheaper than at 60. |
Location | Costs vary depending on where you live. | People in London typically pay a bit more because private medical treatment is more expensive there. |
Level of cover | More comprehensive cover increases cost. | Increasing your level of cover, say your outpatient limit, raises premiums. |
Excess | A higher excess (the amount you agree to pay per claim) lowers your premium. | £500 excess = lower monthly cost than a £100 excess. |
Lifestyle | Factors like smoking can increase premiums. Living a healthy lifestyle can lead to cheaper premiums. | Smokers usually pay more. People in healthy weight ranges or who meet other healthy criteria may get a discount of 10-15%, depending on the insurer. |
Policy type | Individual, couple or family policies vary in price. | Joint or family plans are often cheaper than taking out multiple individual plans. |
Optional extras | Adding benefits such as mental health cover or dental can raise premiums. | Your overall cost will rise with each add-on you select. Only choose what you really need to keep premiums affordable. |
How often you pay | Some insurers charge more for monthly payments. | Paying annually can work out cheaper than spreading the cost monthly. |
How health insurance premiums change as you age and what to do about it
Age is one of the biggest factors affecting your health insurance premium. As you get older, the likelihood of needing medical treatment generally increases, and this is reflected in the cost of cover.
To show how age can impact your premiums, we looked at estimates from a leading UK insurer. Bear in mind that this is an example only, and your own premium will depend on the insurer you choose, your personal details and your chosen level of cover.
How age affects health insurance premiums | |
|---|---|
Age | Monthly premium |
20 | £27.25 |
30 | £36.21 |
40 | £45.40 |
50 | £72.23 |
60 | £102.14 |
70 | £171.28 |
Premium estimates based on a non-smoker living in Blackpool, choosing a comprehensive policy with a limited hospital list, a £500 excess and a £1,000 outpatient limit.
The figures show a steady increase in premiums through your 20s, 30s and 40s, before costs begin to rise more sharply from age 50 onwards. By age 60, the monthly premium is more than double what it is at 40. By 70 it increases further, reflecting the higher likelihood of needing treatment and the associated cost of care at older ages.
To put this into perspective, the average cost at age 30 works out at around £1.20 per day, while at age 50 it is roughly £2.40 per day. These daily figures can make the cost feel more manageable when compared to other regular household expenses.
While age is a key driver of price, there are still ways to manage costs over time, such as adjusting your excess or reviewing your level of cover as your needs change.
How does excess affect the price of health insurance?
Your excess is the amount you agree to pay towards a claim before your insurer covers the rest. In most cases, increasing your excess is one of the simplest ways to reduce your monthly premium.
To show how this works in practice, we gathered estimates from a leading UK insurer.
How excess level affects health insurance premiums | |
|---|---|
Excess | Monthly premium |
£0 | £67.16 |
£100 | £62.46 |
£250 | £55.15 |
£500 | £45.40 |
Premium estimates based on a 40-year-old living in Blackpool selecting a comprehensive plan, a limited hospital list and a £1,000 outpatient limit. Your own premium will vary depending on your age, location and level of cover.
Even a relatively small increase in excess can make a noticeable difference. Moving from no excess to £100 saves around £5 per month, while increasing to £250 brings the saving to £12. Opting for a £500 excess reduces the premium by more than £20 per month compared to no excess.
The data highlights how adjusting your excess can be a practical way to manage your monthly costs. The trade-off is that you will need to pay more upfront if you make a claim, so it’s important to choose a level you would feel comfortable covering.
How your hospital list affects your premium
Most insurers offer a choice of hospital lists, which determine where you can receive treatment. While the exact names vary between providers, you usually choose between a limited list or an extended, more comprehensive option that includes a wider selection of hospitals. For a top-of-the-range option, there is usually also a full hospital list that includes access to central London facilities.
For many people, a limited hospital list will be more than enough. However, if you would prefer more flexibility or want access to a broader range of hospitals, choosing an extended list may be a better fit.
Here is an example of how this choice can affect your premium, with premium estimates from two leading insurers:
How hospital list choice affects health insurance premiums | ||
|---|---|---|
Hospital list | Bupa | AXA |
Limited | £45.40 | £50.30 |
Extended | £48.44 | - |
Extended + London | £50.36 | £57.09 |
Premium estimates based on a 40-year-old living in Blackpool selecting a £500 excess and £1000 outpatient cover. Your premium will depend on the insurer you choose, your age, location, smoking history and chosen level of cover.
With Bupa in our example, the difference in cost is relatively small, just a few pounds per month between each option. Moving from a limited list to an extended list increases the premium by £3, while including London hospitals adds around £5 per month overall.
For comparison, AXA offers a choice of two hospital lists rather than three. Selecting a limited list brings the overall premium to £50.30 per month, while the full hospital list including London comes to £57.09 – a difference of £7. For some people, especially those who want a wider choice of hospitals or need access to London-based facilities, this small extra cost can be worthwhile.
How outpatient cover affects your premium
Outpatient cover is one of the key areas where you can tailor your policy to manage your monthly premium.
This element of your cover typically pays for specialist consultations, diagnostic tests and scans before any hospital treatment begins. This can include blood tests, X-rays, ultrasounds, CT, MRI and PET scans, as well as minor outpatient treatments such as physiotherapy, osteopathy and chiropractic care.
As a general rule, the higher your outpatient limit, the more you’ll pay each month. To illustrate the difference, a healthy 40-year-old might see premiums vary as follows with one leading insurer:
How outpatient limits affect health insurance premiums | |
|---|---|
Outpatient cover level | Monthly premium |
£500 outpatient limit | £40.11 |
£1,000 outpatient limit | £45.40 |
Unlimited outpatient cover | £57.74 |
Premium estimates based on a 40-year-old living in Blackpool selecting a £500 excess and limited hospital choice. Your premium will depend on the insurer you choose, your age, location, smoking history and chosen level of cover.
Reducing outpatient cover can make a noticeable difference to your monthly cost. The trade-off is that you may need to pay for consultations or tests yourself before any private hospital treatment is approved.
You may welcome this saving, particularly if you’re comfortable using the NHS for initial diagnosis. Alternatively, you may prefer the reassurance of having more outpatient care costs covered privately from the outset.
Individual, couple and family health insurance premiums: how do they compare?
The type of policy you choose can have a noticeable impact on how much you pay overall. While adding more people will increase the total premium, the cost per person often falls.
How much discount you receive on your plan depends on the insurer you choose, but discounts of up to 10% are out there for both couple and family plans.
As an example, we gathered estimates from a leading UK insurer that offers a 5% discount on couples’ plans and a 10% discount on family plans.
How an individual, joint or family plan affects health insurance premiums | ||
|---|---|---|
Policy type | Monthly premium | Average cost per person |
Individual | £45.40 | £45.40 |
Couple | £86.26 | £43.13 |
Family (1 adult & 2 children aged 12 & 5) | £63.73 | £21.24 |
Family (2 adults & 2 children aged 12 & 5) | £103.27 | £25.82 |
Family (2 adults & 4 children aged 12, 5, 3 & 1) | £103.27 | £17.21 |
Premium estimates based on a non-smoking couple aged 40, living in Blackpool, selecting a limited hospital list, £500 excess and £1,000 outpatient limit. Family estimates include two children aged 12 and 5, and four children 12, 5, 3 and 1.
The figures show how adding a second adult increases the overall premium but reduces the cost per person due to the 5% discount.
But the most striking difference comes with family cover. In this example, adding two children to a couple’s policy only increases the premium by around £14 per month. That’s a significant drop in the cost per person.
Additionally, the price remains the same whether the plan has two children or four. This is because the insurer in this example only charges for the oldest child, with younger children effectively covered at no extra cost. There are several UK insurers that offer this money-saving feature.
This type of pricing structure can make family health insurance particularly good value. However, not all insurers offer the same approach, so if you are considering family cover, it is worth comparing options carefully to find the right level of cover and the best deal for your household.
Our expert advisers can help you find the right cover for you, your family or your children from leading UK insurers. We’ll also check for the best available discounts and deals, such as plans that only charge for the oldest child.
How can I reduce my private health insurance premiums?
If you are looking to make your policy more affordable, there are several ways to reduce your premium without necessarily removing the cover that matters most to you.
To help you see what kind of savings can be made when you adjust your policy, here are some example figures:
Factors that can reduce your health insurance premiums | ||
|---|---|---|
Cost-saving option | Potential saving | Trade-off |
Increase your excess | Increasing your excess from £0 to £500 can knock around £20 a month off your premium with one insurer | Higher upfront cost if you claim. |
Tailor your cover | With one insurer, removing cancer and mental health cover to create a basic level plan can save £13 a month. | Less comprehensive protection. |
Reduce your outpatient limit | Reducing outpatient cover from unlimited to a £500 limit could save around £17 a month. | You may need to pay towards consultations, scans or tests yourself before treatment is approved. |
Remove optional extras | Removing dental and optical can save £17 a month with one insurer. | Lose benefits that are often optional, like dental, mental health or therapies. |
Pay annually instead of monthly | Paying for the whole year upfront can reduce the overall cost. For example, one insurer reduces premiums by 5% if you pay annually rather than monthly. | Larger upfront payment required. |
Choose a limited hospital list | Typical savings of £5-7 a month when selecting the limited list over the full one. | Less choice of hospitals, though the service and treatment you receive will be the same. |
Arrange a family or couple policy rather than individual plans | Several insurers offer discounts for joint or family plans. For example, you can get a 5% discount for couples and 10% for families. Free child benefits (where you only pay for your eldest) can also make a huge difference to your premium. | In some (but not all) cases, all members on the policy will have the same level of cover, which can limit how much you can tailor protection for each person. |
Choose a healthy lifestyle | Some insurers offer discounts of up to 15% for non-smokers who meet certain health criteria, such as a healthy BMI and not having diabetes or pre-diabetes. | Some insurers’ healthy-living discounts may not continue after the first year. |
Switch health insurance providers | Comparing quotes and switching insurers could save you money if your renewal premium has increased or better-value cover is available elsewhere. | You may need new underwriting, which could lead to exclusions for conditions currently covered. |
The figures above are illustrative estimates based on a healthy 40-year-old in Blackpool, using typical pricing and data from leading UK insurers.
Why choose Money Service for your health insurance?
With so many factors affecting the cost of health insurance, finding the right policy at the right price can take time. That’s where our specialist comparison and advice service can help.
With Money Service, you can expect:
A comparison of plans from leading UK insurers, including Bupa, Aviva and WPA.
Help to find a great value plan by checking for insurer rewards, cashbacks or useful plan benefits that can save you money.
Personalised recommendations based on your needs and budget.
Step-by-step support from enquiry to application.
And don’t forget our Best Quote Guarantee… if you find a better like-for-like quote, we’ll send you a £250 Amazon voucher!
Speak to an adviser today to get started. Call 0800 144 4777 or request a call back at a time that suits you.
FAQs
Why does my health insurance premium increase at renewal?
Premiums can increase at renewal for several reasons. Age is a key factor, as the likelihood of needing treatment generally rises over time. Insurers may also adjust prices to reflect increasing medical costs, advances in treatment, and overall claims trends across their customer base and the wider market. Even if you have not claimed, wider industry pressures can still affect your renewal price.
Can I change my level of cover mid-policy to reduce my premium?
Changes to your level of cover are usually made at renewal or if you switch insurers, rather than during the policy term. This allows you to review your needs and adjust things like excess, hospital list or optional extras. Some insurers may allow you to make changes mid-policy, but admin fees may apply.
Does making a claim affect my future premium?
Making a claim can affect your premium, particularly if your policy includes a no-claims discount. If you claim, this discount may be reduced or removed at renewal, which can increase your premium. However, other factors such as your age and general price increases can also play a role, so a higher premium is not always solely due to a claim.
Is it cheaper to pay health insurance premiums monthly or annually?
Paying annually can be cheaper as some insurers offer discounts for annual premiums, or apply interest or admin charges to monthly payments. Spreading the cost monthly can make budgeting easier, but it may slightly increase the total amount you pay over the year. The difference is often small, but it’s worth comparing both options when reviewing your quote.
Can I pause or freeze my health insurance premium if I cannot afford it?
Insurers don’t tend to allow you to pause or freeze your premium without cancelling your policy. If payments stop, your cover will usually end, and you may lose any benefits built up, such as no claims discounts or underwriting terms. If affordability becomes an issue, it is often better to speak to your insurer about adjusting your cover, such as increasing your excess or removing optional extras.
