Why does health insurance get more expensive as we get older?
If you've had private medical insurance for a while, you may have noticed your health insurance premiums slowly creep up as you age, but why is that? Here, we explore what affects health insurance rates, why premiums increase and what you can do to keep them as affordable as possible.
What does health insurance cover?
Health insurance plans vary depending on the level of cover you've chosen. However, one aspect they all have in common is that policies only cover acute medical conditions - these are illnesses that start suddenly and can be resolved with treatment, such as broken bones.
The opposite of acute illnesses are chronic conditions which aren't covered by health insurance. Chronic conditions can't be cured but can be managed; examples include diabetes, arthritis and heart disease.
As well as covering the treatment of acute conditions, most health insurance plans will typically include:
- Access to a GP 24/7
- Access to wellbeing and mental health support
- In-patient treatment (where you stay in a hospital for at least one night)
- Choice of hospital and private room
- Cash benefits if you decide to use NHS treatment instead of claiming
Most but not all policies also include cancer care. In some cases, this will provide access to the latest treatments that might not be available on the NHS.
For an increase in your health insurance premium, you can add extras to your policy, for example, physiotherapy, acupuncture, and counselling.
Don't go direct, compare first to find the right plan
Buying directly from an insurer may seem simpler, but there are downsides you should be aware of. Their online quote systems rarely show all available plan options, and if you speak with them, they can only tell you about their own products, not advise you based on your situation.
An experienced broker can show you the full picture and help you find the right cover at the best price.
When you compare through myTribe, we match you with a health insurance broker that is vetted and actively monitored for customer satisfaction, speed and reliability of communications, and knowledge, so you get a genuine product expert helping you, not just a sales call. To get a personalised market comparison, please click below, and remember to let us know how you get on.
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Watch: How private health insurance works
Here's a short video explaining how private health insurance works:
How much are health insurance premiums?
What you pay for health insurance depends on several factors. However, to give you an idea of the cost, we conducted extensive research that revealed that the average health insurance premium in the UK currently stands at £86.07 per month (or £1,302.84 per year).
Related guide: Average cost of private health insurance in the UK
What affects the cost of health insurance premiums?
As with other types of insurance, health insurance companies will consider your risk profile, in other words, how likely you are to make a claim. The greater the chance, the more you can expect your insurance to cost. Considerations include:
- Your age - is a hugely important factor in calculating health insurance premiums, and you'll usually find policies increase as you age.
- Your lifestyle - smoking can increase health insurance premiums as there are greater associated health risks.
- Your medical history- if you've suffered from ill health or have some pre-existing medical conditions, it could mean you pay more for health insurance or have more exclusions than someone who hasn't
- The policy you choose - the more features your policy includes, the more you can expect to pay.
- Where you live - some regions are more expensive than others when it comes to the cost of medical treatment. Also, some areas affect health negatively, for example, densely populated places with heavy infrastructure and higher pollution levels. So, if you live in a large city, you can expect to pay more than someone the same age living in a rural or less stressful environment.
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Why do health insurance premiums increase with age?
So, why does age affect health insurance premiums significantly? Fundamentally, the older we get, the higher the risk of injury or developing an illness. Also, the illnesses that could develop tend to be expensive to treat, for instance, Cancer. In fact, according to Cancer Research UK, half of all cancers are in people who are over 70 years old. One in two of us is also likely to develop Cancer in our lifetime.
Some health insurance companies will increase prices gradually as you age - for example, rising health insurance costs each time you renew your policy. Others will charge premiums based on age bands, so you might notice a sudden price rise when you move up to a new band (for instance, from 20-30 years up to 31-40 years).
Why else do health insurance premiums increase?
As well as your circumstances (age, lifestyle and where you live), health insurance costs are also affected by:
Your claims history
If you've made a recent claim, you can expect your health insurance premiums to increase at renewal unless your policy is set up using a community rating or pooled risk. If you don't claim, some insurance companies will give you a no-claims discount (similar to car insurance).
Population trends
While it's good news that most of us are living longer, an ageing population places greater strain on all medical services and provision. Insurance providers must factor this in when determining health insurance rates, which could mean higher premiums for all policyholders.
Inflation
Inflation increases the price of everyday items. This can affect the cost of all hospital services, even if they're not health-related expenses. For example, an increase in the price of food and energy can all lead to higher premiums.
Medical inflation
As well as general inflation, healthcare insurance premiums are also affected by medical inflation. This has an impact on healthcare-related costs, such as medical technology, treatments, procedures and even prescription drugs.
It's worth noting that medical inflation is particularly sensitive to technological improvements. So, while breakthroughs can help cure illnesses and improve overall medical care, the cost of providing those services can increase your health insurance rate.
Insurance premium tax (IPT)
IPT is charged on most insurance products, including private medical cover. It's currently set at 12% and is usually passed on to you as the policyholder. It means your insurance provider will add 12% to your premium.
Although IPT has stayed the same since 2017, it could rise anytime. Remember that if your base premium rises, adding IPT will increase the overall cost even further.
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How can I cut the cost of health insurance premiums as I age?
If you've started to notice the cost of private health coverage slowly increasing or you're thinking about buying a health insurance policy for the first time, here's what you can do to help keep costs down:
1. Consider your policy level and optional extras
Only buy the policy you're most likely to use. It sounds obvious, but getting carried away with extras is easy. Compare what health insurance options each provider offers and weigh what you're most likely to need.
2. Increase your excess
Increasing your excess can help reduce your overall insurance premium, but it's worth checking how your provider charges excess in the first place.
Some insurance providers will only charge you the excess once, no matter how many times you claim within 12 months. Others will charge you for every claim you make, which can add up if you need to make several claims in one year.
It's also worth checking what happens if your policy's up for renewal while you're still having treatment; you may have to claim on your new policy to continue treatment. As this would technically be a new claim under a new policy, you may have to pay the excess again.
3. Maintain good health
You can keep premiums down by maintaining your health, for instance, stopping smoking or cutting down on alcohol. Some providers will even offer discounts if you stay within a healthy weight range.
Other incentives include gym discounts and step monitors with points awarded for meeting goals, which triggers a discount in your premium. Ultimately, the healthier you are, the less likely you are to claim.
4. Choose hospital networks you'll use
When you choose a health insurance policy, you'll usually have access to a national network of hospitals, but unrestricted access can be expensive.
Instead, you can limit which hospital network you want any treatment to take place in. For example, if you'd prefer to be treated close to home, you can select your regional network and remove all others.
5. Limit consultant choice
Some providers will let you choose which consultants you see, but this usually comes at a cost. If you don't mind who you see and simply want to be treated quickly, you can avoid paying more by letting your provider choose for you (you may also be given a list to choose from).
6. Add family members
Some providers offer a discount if you're a couple or if you add other family members to your policy.
How do I choose the right health insurance for me?
Health insurance can provide peace of mind, knowing you can avoid lengthy waiting lists should you develop health issues. With so many policies and health insurers, deciding which policy is right for you can take time and effort.
Let us know if you'd like to explore your options in more depth. We can put you in touch with a regulated broker who can explain what's available and offer advice based on your needs and budget.
We've also put together a series of guides that can help you get a better idea of how private healthcare works:
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Disclaimer: This information is general and what is best for you will depend on your personal circumstances. Please speak with a financial adviser or do your own research before making a decision.
Frequently Asked Questions
What age can you buy private healthcare insurance?
You must be 18 years old to buy a health insurance policy. If you have children, you can add them to your existing plan (which usually means it becomes a family policy).
If you don't already have health cover, you can buy a family health insurance policy covering children up to 18 years old. Some family policies will cover adult children until 24 years old as long as they're in full-time education.
Is there a maximum age for health insurance?
Broadly, the oldest you can be to buy private healthcare is 80, but some health insurance companies set much younger limits (65 years in some cases). In contrast, some insurance companies don't have any age limits.
Can I buy health insurance if I'm over 65?
Yes, but your choice of health insurance company might be limited compared to someone younger. Most health insurance providers set upper age limits at around 80, but some are as low as 65.
Is a private health insurance plan worth it?
Deciding whether to buy private health insurance is a personal choice.
While medical care is free under the NHS, health insurance provides convenience and offers peace of mind. Not only can you avoid long waiting lists (currently, there are more than 7.5 million people waiting for NHS treatment), you can decide where you're treated and who by (depending on the level of cover you have).
When you weigh up the pros and cons, it's important to remember that private health insurance policies don't cover emergency treatment, chronic illness or pregnancy (unless there are complications and a risk to the mother's health).