You might have a suitable health insurance policy, but are you going to be able to pay the increased premium rates come April 1? Depending on your insurer, your premiums will rise by different amounts, but there is a way to avoid having to pay increased rates.
Locking in your current insurance premiums is possible by paying your premiums 12 months in advance. This initial expense means you'll save the percentage your insurer increases their premiums by. For example, if your monthly premiums are $100, and your insurer plans to increase their premium rates by 5 per cent, your new premiums will be $105 per month. That changes your annual expense from $1,200 to $1,260, which is a sound saving for many Australian families.
Why you can't rely on premium increase percentages
While a saving of $60 might not seem like a huge amount – especially when you'd have to front up $1,200 in the first place – the insurance premium increases across the insurers vary greatly. While the Department of Health has set the April 1 2017 increase at an industry average of 4.84 per cent, some insurers will increase the premiums more than that, and some less.
If you have the capital available, and you're going to save over $300 or $400, paying in advance will be a savvy financial move.
The largest increase will be 7.99 per cent, and the lowest just 2.98 per cent. However, percentages mean little if the initial cost of the premium is not taken into account as well. A higher premium increased by 2.98 per cent might still end up being more expensive than a lower initial premium increased by 7.99 per cent.
Make sure to look at all aspects of your health insurance before deciding on paying in advance – if you only stand to save $50 and will struggle to budget for the upfront payment of a year's premiums, it may not be worth the effort. On the other hand, if you have the capital available, and you're going to save over $300 or $400, paying in advance will be a savvy financial move.
What if your insurer isn't working for you?
If your health insurer is not increasing premiums by much, but you don't feel like you're getting the most suitable cover for your needs, it might be time to change your policy. There are 34 health insurance companies in Australia right now, and one of them might provide a more appropriate service.
For help making sure you're getting the right cover, and to determine if it's worth paying your premiums upfront before the rate rise on April 1, get in touch with HICA today for a free consultation.