Private Health Insurance vs Health Cash Plan: What's the Difference?

Private medical insurance (PMI) and health cash plans are both sold as ways to access private healthcare — but they're structurally different products covering different things, and treating one as a cheaper version of the other leads to real gaps in cover. This guide explains exactly what each does.

What private medical insurance covers

PMI covers the cost of private treatment for new, acute medical conditions — hospital procedures, specialist consultations, diagnostics, cancer treatment, and (depending on the policy) mental health support. You pay a monthly premium, and when you need treatment the insurer pays the private hospital and specialist directly, or reimburses you.

The value is in protection against unpredictable, large-cost events: private cancer treatment, inpatient surgery, MRI scans, and specialist consultations where NHS waits would be long. You hope never to need it, but if you do, the cost without it would be significant.

Typical cost: £28–£200+/month depending on age, cover level and insurer.

What a health cash plan covers

A cash plan reimburses a percentage of routine healthcare costs you've already paid yourself — up to an annual cap per benefit category. It doesn't pay the provider directly and it doesn't cover hospital treatment. Instead, you pay for your dental check-up, eye test, physiotherapy session or prescription, then claim back a portion (often 50-100% up to the cap) from your cash plan provider.

The value is in making predictable, routine healthcare spending cheaper — costs you were going to incur anyway. Most adults see a dentist and optician regularly, and if you use physiotherapy or similar therapies, the reimbursement can meaningfully offset costs over a year.

Typical cost: £8–£30/month depending on tier and provider.

What each does NOT cover

PMI does not cover:

• Routine dental check-ups or optical tests (usually optional add-ons)
• Pre-existing conditions initially
• Chronic condition management
• Emergency treatment
• Pregnancy

Cash plans do not cover:

• Hospital treatment or surgery
• Cancer treatment
• Pre-existing conditions (usually)
• Emergency treatment

The gap that catches people out: a health cash plan provides no protection against the large, unpredictable medical costs that PMI is designed for. If you have a cash plan but not PMI and you're diagnosed with cancer, the cash plan's dental and optical reimbursement is irrelevant to your actual medical situation.

Benenden Health — a third model

Benenden Health sits in a separate category from both. It's a membership scheme (not medically underwritten insurance) that provides discretionary access to private diagnostics and treatment specifically when NHS waits exceed a set threshold (three weeks for diagnostics, five weeks for treatment). Access is discretionary rather than contractually guaranteed the way PMI or cash plan claims are. It does not cover private cancer treatment.

At £15.85/month it's the lowest-cost entry into any form of private healthcare access, but it's a different product from both PMI and a cash plan, and shouldn't be confused with either.

Do you need one, both, or neither?

PMI only: The right choice if protecting against large, unpredictable medical costs is the priority and you're comfortable paying dental and optical bills from income. Most PMI buyers don't also hold a cash plan.

Cash plan only: Makes sense if your main concern is routine costs (dental, optical, physio) and you're comfortable using the NHS for any major medical event. Appropriate if PMI is genuinely unaffordable or you've decided the risk is worth taking.

Both: Some people hold both — a cash plan for predictable routine costs, PMI for the unpredictable expensive scenarios. The combination makes financial sense if you use enough routine healthcare that the cash plan pays for itself, and you want the protection of PMI for bigger events.

Neither: A genuine, rational choice if you're young, healthy, and comfortable with NHS waiting times for the foreseeable future. Not a gap you'd usually regret unless something unexpected happens.

Quick guide to which cash plan providers offer what

Provider	From	Best for
Westfield Health	£8.58/mo	Lowest price, free child cover
Simplyhealth	~£10/mo	Highest dental caps
Sovereign Healthcare	~£9/mo	Highest-rated claims service
Medicash	~£9/mo	Broad therapy categories
Health Shield	~£12/mo	Dependent children included
Benenden Health	£15.85/mo	NHS-wait backstop, not cash plan

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This guide is for general educational information only and is not financial or insurance advice. Product terms vary — always confirm current cover and exclusions before purchasing.