How is my premium (the cost of an insurance policy) calculated?

Insurers use risk data to calculate the likelihood of the event you are insuring against happening. This information is used to work out the cost of your premium. The more likely the event you are insuring against is to occur, the higher the risk to the insurer and, as a result, the higher the cost of your premium.

An insurer will take two important factors into account when working out the premium they will charge:

  1. How likely is it in general terms that someone will need to make a claim?
  2. Is the person who wants to take out a policy a bigger or smaller risk than the ‘average’ policyholder. Your medical history can help to inform this.

To find out more about how insurance works in the UK, you can read the ABI’s guide here.

There are specialised insurance brokers who can help to identify different insurance companies or products for those with complex and pre-existing health conditions, and details of these are provided by some patient groups.