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How does health insurance work UK?

Here's our step by step guide to how health insurance works including how to apply, how to make a claim and important things to watch out for

A photo of Grace Lynch, the author

By Grace Lynch

Published on: 6 February 2023

10 min read

How does health insurance work UK?

Private health insurance can be an extremely useful policy, but it can seem complicated to understand when you’re looking at your options for the first time. it can be tricky to work out how to apply, how to make a claim and which policy features to add (or remove).

Before I looked more closely into health insurance several years ago, I had no idea just how many different options, benefits and even insurance providers there were. It’s understandable that it can all feel a bit overwhelming and leave you unsure of how health insurance works or how to choose the right cover.

So many more UK consumers are now buying private health insurance due to the recent struggles of the NHS. We decided to take the time to create a step by step guide about exactly how health insurance works to make things a bit easier.

QUICK SUMMARY – How does health insurance work UK?

Private health insurance (or private medical insurance) is a policy that is designed to help you cover the costs of private healthcare. You claim for the private medical care that you need from the pre-approved list of specialists that you and your insurer have agreed on.

  • Do your research and consider how much you can afford to pay and which benefits you would consider vital to have. Think about the type of policy you need and what is most important for you to protect against (e.g. cancer cover).
  • You can add on additional benefits to your policy for a higher level of cover. Health insurance policies are flexible, letting you customise them, so they work best for what you need.
  • If you’re not sure how a new or existing health insurance policy would work for you, you can get some advice from a health insurance specialist.

Private health insurance works in a similar way to other common types of insurance policy such as car insurance or home insurance.

  1. Decide on what type of policy you want and which provider feels right for you.
  2. Apply for and buy your policy (you will need to answer a few questions about your health unless you opt for ‘moratorium’ underwriting).
  3. The insurer will base the price of your policy on factors like your age, your health, where you live, your claims history (how many times you’ve claimed in the past) and more.
  4. Once your policy is in place, you will need to pay for it either monthly or annually.
  5. You will need to renew your policy once every year. The insurer will get in touch with you when your policy is due for renewal.
  6. Health insurance is designed to work alongside NHS care, and usually won’t pay out until after you’ve had an initial appointment with your own GP. This first appointment is referred to as ‘primary care’.
  7. Private health insurance is intended for the treatment of acute (curable) medical conditions. It’s a bit frustrating but most of the time insurers won’t pay out for the treatment of pre-existing or chronic (long term) medical conditions*.

Below we explain more about how health insurance works, from deciding if it’s worth it, to choosing the right provider and even complaining about or cancelling your policy if you need to.

Step 1 – Do you need health insurance?

If I’m being honest health insurance isn’t going be for everyone, even if it is a useful policy. Most of the time this will be because of the price (it can be possible to find affordable health cover though with the right advice).

The first step in buying health insurance is deciding whether it’s actually worth it for you and your family. The NHS does a brilliant job and often the free care that they provide will be enough. Here’s some pros and cons of private health insurance to help you work out if you think it’s worth it for you:

ProCon
Quicker access to the treatment you need (skip long NHS queues)Can be expensive so isn’t affordable for everyone
Access to top-quality specialists across the UKWill cost more based on factors like your age and where you live
Flexible policies so you can tailor your cover to your own budgetYou will need to remember to renew your policy every year (unless it’s set up to auto renew)
Option for additional benefits like dental cover for a higher level of protectionCan be confusing to understand all your policy options
Many providers offer free extra perks which using them such as gym discounts and other rewardsWon’t usually cover treatment of pre-existing medical conditions or chronic medical conditions

Step 2 in how health insurance works is deciding what type of policy is the right choice for you. there are so many options available which can be a bit overwhelming, so it’s useful to think about the following things to help narrow your choices down:

  • How much do you want to pay for your policy?
  • What is most important to you to protect against (e.g.cancer cover)?
  • Are you buying health insurance for you, for your whole family, or for your business?
  • Do you want a provider that offers extra benefits and rewards?
  • Where do you live? (this can affect which providers are offering a good price)
  • Would you be able to afford private healthcare without insurance? (e.g.using savings)
  • Are you happy to use NHS services for some of your treatment? (can make things cheaper for you)
  • How much excess do you want to pay? (the more excess you pay, the lower the cost of your policy in most cases)

You need to choose which type of health insurance you want to buy at this point. Depending on what your own situation is,  you might be interested in:

Step 3 – Do I add on any extra benefits?

The next thing you’ll want to think about is if you wanted to add any extra benefits to your policy. I believe that one of the best things about health insurance is that the policies are so flexible. No matter what provider you choose there will always be at least a few options for additional benefits that you can add if you want to.

It can be difficult to compare health insurance policies like for like because the core cover offered will vary. What is a core (automatically included for free) benefit with one provider, might be something that you need to add on for an extra cost with another.

Here’s a breakdown of some of the most popular health insurance benefits and whether they’re included free (or available to add on) with each provider.

Aviva

Core benefits (FREE)Additional benefits (extra cost)
In patient treatment
Cancer treatment and after care
Out patient cover (diagnostic tests and treatments only)
NHS cash benefit (£100 per night spent in an NHS hospital, up to 30 nights max.)
Dental cover
Optical cover
Mental health treatment cover
Protected no claims discount
Additional treatments cover (e.g. physiotherapy)

AXA Health

Core benefits (FREE)Additional benefits (extra cost)
Unlimited yearly cover for specialist fees
Cancer treatment (in patient/day patient)
Home cancer treatment (e.g. chemotherapy)
Hospital accommodation benefit (if your child is having medical treatment)
Unlimited outpatient surgeries and scans
Additional therapies cover (up to £750)
Nurse or care assistance (up to £300)
24/7 health support helplines
Travel cover
Mental health cover
Enhanced therapies cover (up to 10 sessions with a specialist)

Bupa

Core benefits (FREE)Additional benefits (extra cost)
Mental health cover
Access to breakthrough cancer drugs and treatments
24/7 digital GP access
Bupa member rewards (includes dental care discounts and gym discounts)
NHS cash benefit (£50 per night for NHS hospital stays)
Parent accommodation benefit (if your child is receiving overnight medical care)  
Dental cover
Protected no claims discount
Enhanced hospital list (Extended Choice)

Freedom

Core benefits (FREE)Additional benefits (extra cost)
Some dental cover (limited to specific dental surgeries)
Maternity cash benefit (£150 per child)
NHS cash benefit (£200 per night in an in NHS hospital, £100 per day)
Comprehensive cancer cover including treatment
Covers specified pregnancy complications
Dental cover
Mental health cover
‘Plus’ hospital cover (enhanced cover)
Outpatient cover
Alternative therapies cover (e.g. physiotherapy)

National Friendly

Core benefits (FREE)Additional benefits (extra cost)
Choice of cover ‘levels’ (4 simple cover options)
Dental and optical cover (for specific serious procedures)
No premium increases if you claim in the first 5 years
Can add up to 10 children to your policy
Second medical opinions
Extensive cancer cover
Palliative care for terminal illness (with Level 4 cover)
£60 fee for guidance about care homes/home nursing
Can choose a higher level of cover for more benefits

The Exeter

Core benefits (FREE)Additional benefits (extra cost)
Private ambulance cover
Home nursing cover
Outpatient surgeries cover
Parental accommodation benefit
Up to 3 sessions of physiotherapy (post operation)
£250 hospice donation (if you are admitted for care)
NHS cash benefit (£150 per night for overnight stays in an NHS hospital)
Enhanced outpatient cover (tests, X-rays and specialist fees)
Unlimited outpatient cover
Mental health cover
Additional therapies cover(e.g. physiotherapy)
No claims discount

Vitality

Core benefits (FREE)Additional benefits (extra cost)
Comprehensive member reward scheme (includes HUGE discounts on popular brands like Apple, Garmin, Caffe Nero and more)
NHS cash benefit (up to £2,000 maximum for staying in an NHS hospital, £250 per night)
Advanced cancer cover
Up to £100 toward private prescription costs (per year)
Parental accommodation benefit
Cover for home nursing or rehabilitation treatment
Cover for specific weight loss surgeries
Optical, dental and hearing cover
Worldwide travel cover
Mental health cover
Alternative therapies cover
Outpatient cover

WPA

Core benefits (FREE)Additional benefits (extra cost)
Outpatient cover
NHS cash benefit (non cancer patients)
Up to 10 nights parental accommodation benefit
Up to 4 weeks of home nursing care
Up to £700 hospice donation
Up to 6 counselling sessions
24/7 remote GP services
Enhanced mental health cover
Dental cover
Overseas medical treatment cover
Extra outpatient cover for consultations
Therapy benefit

The best way to find the right health insurance is to compare what each insurer is offering and there are 3 main ways to compare health insurance policies.

  1. Do it yourself –  you can do the research and compare policy features yourself but this can be time consuming or too difficult in many cases.
  2. Use a price comparison site – a price comparison site can be a quick way to get an idea of which policies are cheapest, but may not go into much details about policy features.
  3. Ask an expert – this is the quickest and easiest way to compare health insurance policies. A health insurance specialist will be able to compare prices and policies across the market to find the cover you need.

Once you’ve got a better idea of the type of cover you want and which benefits you would like to have, you’re ready to apply for cover. You can do this in one of a few different ways:

It’s understandable to be a bit wary or unsure of how the application process will work, especially if you’ve never bought health insurance before. These are the main things you will be asked about when applying for health insurance.

  1. Your age and where you live – these factors will affect how much you pay
  2. Your health and medical history – if you’d rather not disclose a lot of medical information you can opt for moratorium (automated) underwriting. This will make applying a lot quicker but be aware that you might get asked more questions when you need to claim.
  3. Choice of hospital list – you can choose from a range of lists that your provider has for how many specialists you can claim with under your policy. You can choose a more limited list or a ‘guided’ option if you don’t want to pay as much.
  4. How much excess you will pay – this is the amount you would pay towards any claim you make (similar to other policies like car insurance).
  5. If you want to add (or remove) any benefits – you can tailor your policy so it only includes the benefits and features that you really need

Step 6 – How to claim on health insurance

It can be upsetting when you’ve got something wrong with your health and being unsure of how to claim on your health insurance isn’t going to help with this and can add some extra stress.

Luckily the process is normally quite straightforward when you need to submit a health insurance claim.

Here is a list of the steps you’ll need to take with most insurance providers when submitting a health insurance claim.

  1. Visit your GP and get an open referral for the treatment you need
  2. Talk to the insurance provider either over the phone or online to start your claim
  3. Answer a few questions about your symptoms and what you’re being referred for
  4. If your claims approved, you will be able to select a specialist from your chosen hospital list or you’ll be given a short list of recommended specialists by your provider (guided cover option)
  5. Go and have the treatment that you need an insurance provider will get in touch with the hospital or specialist directly to settle the bill

Step 7 – Renewing your health insurance

One important thing that a lot of people don’t realise is that health insurance needs to be renewed. this is similar to other policies like car insurance or home insurance and in most cases you’ll need to renew your health cover every year.

Your insurer will only get in touch with you in the weeks leading up to your policy turning 1 year old. this is known as a policy renewal date and when they contact you they’ll let you know how much your policy will cost for the next year and if anything has changed.

one of the best things about renewing your health insurance so often, is that you can regularly review your cover and make sure it’s still working for you. you can adjust your policy if needed or even switch to a completely new provider.

Step 8 – How to complain about health insurance

No one buys an insurance policy planning that they’ll complain about it at some point – we all hope we’ve picked the right policy and that nothing will go wrong. Of course this isn’t always the case and sometimes insurers will make mistakes. You are always entitled to submit a complaint if you’re not happy with your policy or insurance provider.

If you want to complain there’s normally details on your insurers website for their complaints team. Generally, UK insurers will try and resolve complaints within eight weeks at most, or ideally sooner as they don’t want to end up with a bad reputation for customer service.

If you’re still not happy or just immediately want to take your complaint further, you can speak to the Financial Ombudsman Service (FOS). The FOS is an impartial service designed to help with any issues between consumers and financial services businesses.

Financial Ombudsman Service (FOS) contact details

Tel. 0800 023 4567 (or 0300 123 9123)

Tel. (overseas) – 0207 964 0500

Step 9 – How to cancel health insurance

There’s no need to stick with a health insurance policy that you’re not happy with or any other type of insurance policy. Many people feel like they’re locked in once they’ve chosen a policy or insurer and this really isn’t true.

Need more health insurance advice?

We’ve done our best to put together a comprehensive guide with everything that you need to know about how health insurance works. We understand that it can still be useful to talk to an expert for advice even after doing a bit of research.

If you want to find out more about health insurance, you can speak to our trusted health insurance partner by calling 0800 009 6559 or clicking here.

More health insurance guides

If you’re keen to read more about what MPO has to say about health insurance, here is a list of some of our recent health insurance guides.

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