How Does Private Health Insurance Work in the UK?
Private health insurance is a contract between you and an insurer. You pay a monthly or annual premium, and in return the insurer pays for private medical treatment for new conditions that develop while you’re covered, up to the limits in your policy.
That’s the simple version. Here’s how it actually works in practice.
The five-step lifecycle of a policy
- Quote and underwriting. You answer questions about your health (or accept a moratorium that does it automatically), choose your level of cover, and the insurer prices your policy.
- Activation. You pay your first premium. Cover usually starts immediately, except for any benefits with a built-in waiting period (e.g. mental health, maternity).
- Day-to-day use. You see your NHS GP first for most things. If they refer you for further investigation or treatment, that’s the trigger to use your policy.
- Claiming. You pre-authorise treatment with the insurer, attend the appointment, and the insurer settles the bill directly with the hospital or consultant.
- Renewal. Each year the insurer reviews your premium based on your age, claims history, and underlying medical inflation. You can adjust cover, switch insurer, or simply renew.
How premiums are calculated
Premiums are not the same for everyone. The insurer uses several factors:
- Age; the biggest single driver. Premiums rise as you get older.
- Postcode; local healthcare costs vary across the UK.
- Smoker status; smokers pay more.
- Level of cover; comprehensive plans cost more than core plans.
- Hospital list; premium central London hospitals cost more to access.
- Excess; a higher excess (the amount you pay per claim) lowers your premium.
- No-claims discount; many insurers reward years without a claim.
The role of underwriting
Underwriting is how the insurer decides what’s covered for you specifically. The two main routes:
- Full Medical Underwriting; disclose your history upfront; insurer tells you what’s in and out.
- Moratorium; recent conditions auto-excluded; can come back into cover after a symptom-free period.
For group schemes, larger employers can often access medical history disregarded (MHD) underwriting, which covers everything regardless of history.
What happens when you claim
The standard sequence:
- See your NHS GP and get a referral letter.
- Call the insurer’s claims line (or use their app).
- The insurer authorises a consultation with a recognised specialist.
- After the consultation, you call the insurer again to authorise any tests or treatment.
- The insurer pays the hospital and consultant directly.
You don’t usually pay anything except your excess and any costs above your policy limits.
How treatment limits work
Most policies have:
- An overall annual limit on total claims (or “no upper limit” on top-tier plans)
- Sub-limits on specific benefits (e.g. mental health sessions, physio visits per year)
- Hospital list restrictions; only treatment at recognised hospitals is covered
- Specialist requirements; most insurers require specialists to be “fee assured” or recognised
We help you read the small print before you buy.
Frequently asked questions
Can I claim without seeing my NHS GP first? Most insurers require a GP referral. Some now offer a virtual GP service that counts as your referral.
Do I pay the hospital and claim back? Usually no; the insurer pays the hospital directly. You only pay if you go outside the policy or above its limits.
What if my treatment costs more than my limit? You pay the difference, or you may be able to switch to NHS treatment partway through. The insurer will tell you the limit before treatment starts.
Can I keep using the NHS while I have private cover? Yes. You can use the NHS for anything you want; A&E, routine GP visits, services not covered by your policy. PMI is a layer on top of the NHS, not a replacement.
Questions about how PMI would work for you? Call 0800 131 0400 or email info@insuredhealth.co.uk.
