Insurance

A recent survey found as many as 54 per cent of Australians have never reviewed their private health insurance policy, meaning they’re probably paying over the odds for cover they may no longer need.

“This massive inaction is because people find it a daunting task to undertake,” says Roger McBride, general manager of marketing for health fund broker iSelect. “But there are lots of ways to save.” Here are seven tips to set you on the right track.

1. Look at life stage

Work out which of the seven life stages you are at: a young single, a young couple with no children, a growing family with young children, a family with older children, empty nesters, a retired couple or a retired single. Tailor your policy to exclude procedures you are unlikely to need or include treatments you are more likely to need. If your baby years are over, or children are not in your plans, removing obstetrics can cut your premium by about 11 per cent.

“If you’re young, healthy and have regular check-ups, you may also decide to take off dialysis, which could save another 13 per cent,” McBride says. Not all health funds offer an option to cut certain cover, so you will need to shop around. Balance the cost saving with the risk of eliminating cover you may actually need. Older people on hospital-only cover may consider taking extras cover to cut expenses for optical and dental treatment.

2. Consider an excess

Agreeing to pay a certain amount each time you go to hospital can cut your health fund premium: The higher the excess, the lower the premium. Based on top hospital cover, opting for a $250 excess will save you just under 13 per cent and choosing an excess of $500 could cut your premium by almost 30 per cent, iSelect says.

3. Pay via direct debit

Settling your premiums with direct debit can save about 4 per cent, McBride says. Also, think about timing your payments – if you make an annual payment and get in before your health fund puts up the annual premium you will lock in the old rate. Most health funds increase their rates on April 1, with some doing so later, from May 1.

4. Think ahead

If you’re on singles cover and planning to have a baby, move on to the family insurance rate. Babies may only be a thought at this stage, but even unborn they need to serve a 12-month waiting period. In a perfect world, you’d need to move on to family cover only three months before falling pregnant, but that does not take into account pregnancy complications or premature births. Of all the calls made by health insurance consumers to iSelect, the biggest number (10 per cent) are from couples inquiring about cover for pregnancy and birth.

5. Count the kids

If your kids are adult but still living at home or studying, they may still be insured under your policy. Some policies exclude offspring once they start work, while others extend their cover to full-time students up to 23 and 25 years old. Check your policy.

6. Shop for hospital

Make sure the hospital from which your preferred medical specialist operates is included in your health fund cover. Otherwise, you’ll be out of pocket or find your choices are limited.

7. Do your homework

It’s worth asking brokers such as iSelect and www.health-link.com.au to run a comparison for you. You don’t have to act on it, but you can use the information as leverage with your current provider. If you want to call funds and shop around, industry website www.privatehealth.com.au is a good place to start.