How Much Does Private Health Insurance Cost UK: ABI Data by Age

Why there is no single average price

Asking what private medical insurance costs in the UK is like asking what a car costs: the honest answer is that it depends. PMI is individually rated, so two people of the same age living on the same street can pay very different premiums depending on the cover level, the hospital list, the excess and their underwriting basis. Any single average figure quoted online hides enormous variation.

The Association of British Insurers publishes market statistics on private health insurance, including the number of people covered and the value of claims paid. Those figures describe the market as a whole rather than the price a specific individual will be quoted, which is why a personal quote is the only reliable cost.

Because the product is repriced annually, the relevant cost is not just the first-year premium but the trajectory: how the premium is likely to climb at each renewal as the policyholder ages and as medical inflation pushes up the cost of private treatment.

How premiums change with age

Age is the dominant factor. Younger adults in their twenties and thirties claim less often and less expensively, so their premiums start low. As policyholders move through their forties, fifties and into their sixties and beyond, the probability and cost of claims rise sharply, and premiums rise with them. This is true even for a healthy person with no claims, because the rating reflects the risk pool for that age band, not just the individual's history.

This age effect compounds the general renewal increase. A policyholder can face two upward pressures at once: medical inflation lifting the base cost of treatment, and the move into an older, higher-risk age band. The result is that PMI bought cheaply at 30 can cost several times more by retirement age, which is why the long-term affordability of cover, not just the opening premium, matters when buying.

The ABI's market data illustrates the broad pattern that older age groups account for a larger share of claims, which underpins why insurers price older policyholders higher. The exact figures depend on the insurer's own claims experience.

The other levers that move the premium

Beyond age, several factors push the quote up or down:

• Cover level: a basic in-patient and day-patient plan costs less than a comprehensive plan that adds full out-patient cover, extended cancer benefits, mental health and therapies.
• Hospital list: restricting cover to a guided or limited list of hospitals is cheaper than an open list that includes premium central-London facilities.
• Excess: the amount the policyholder pays per year or per claim before the insurer pays. A higher excess means a lower premium.
• Location: treatment costs vary by region, so postcode influences price, with London typically the most expensive.
• Underwriting basis: moratorium and full medical underwriting can produce different prices and different exclusions.

The six-week option is a further cost-cutter: the policy only pays for private treatment if the NHS cannot provide it within six weeks, which reduces claims and therefore the premium.

Tax, employer schemes and the real cost

PMI premiums carry Insurance Premium Tax at the standard rate, set by HMRC and enacted through legislation. This is built into the quoted premium rather than added separately at the till, but it forms part of the true cost of the cover.

Where an employer provides PMI as a group benefit, the economics differ. Group schemes often secure better terms than an individual could, but the premium the employer pays is treated by HMRC as a benefit in kind, so the employee pays income tax on its value through the P11D process. The headline cost to the employee is therefore the tax on the benefit rather than the full premium.

For individuals, the real annual cost is the premium plus any excess actually incurred during the year, since the excess is money out of pocket before the insurer contributes. A low premium with a high excess can cost more overall in a year with claims than a higher premium with a low excess.

How to bring the cost down

Several legitimate levers reduce the premium without simply gambling on never claiming:

• Raise the voluntary excess to a level the household could comfortably absorb in a claim year.
• Narrow the hospital list to a guided or regional list if the premium-priced London hospitals are not needed.
• Add the six-week option so the policy only pays where NHS waits exceed six weeks.
• Drop modules that duplicate other cover, such as therapies already available through the NHS or an employer.

The FCA's pricing rules mean a renewing customer should no longer be quoted more than an equivalent new customer, so reviewing the renewal against the firm's own new-business price is worthwhile. If the renewal looks high, contacting the insurer to discuss the excess or cover level can bring it back into line.

Switching insurer can also cut cost, but switching on a fresh full-underwriting basis risks re-excluding conditions that developed under the old policy. Many people switch on a continued-cover basis to keep their existing exclusion position while shopping for a better price.

Frequently asked questions

What is the single biggest factor in the price?

Age. The likelihood and cost of claims rise with age, so premiums climb steadily through a policyholder's forties, fifties and beyond, even without any claims history.

Does the ABI publish average prices?

The ABI publishes market data on the number of people covered and claims paid, which describes the market overall. It does not replace a personal quote, which is the only reliable cost for an individual.

How can I lower my premium?

Raising the excess, narrowing the hospital list, adding a six-week option and dropping unneeded modules all reduce the premium. Reviewing the renewal against the insurer's new-business price is also worthwhile under FCA pricing rules.

Is there tax on private health insurance?

Yes. Insurance Premium Tax at the standard rate applies to PMI premiums and is built into the price. Employer-paid cover is also a benefit in kind, taxed on the employee via the P11D.

Why does my renewal cost more even though I did not claim?

Premiums rise with medical inflation and with moving into an older age band, both of which can push the renewal up regardless of an individual's own claims record.