Around 2.4m Australians (17% of the country's population) with private health insurance have increased their excess in the past two years to reduce their premiums according to a new research by Money.com.au.
The study reveals that the majority of health insurance policyholders (72%) have kept their excess the same, while 10% of Aussies with private health cover didn’t know they could request to change their excess.
Money.com.au general manager of health insurance Chris Whitelaw said Australians need to weigh up the trade-off between premium savings and potential out-of-pocket costs when deciding whether to raise their excess.
He said, “If you’re looking to reduce your health insurance costs, the first port of call is to increase your excess. It’s the quickest way to bring down your monthly premium without downgrading or bumping off your cover altogether.”
“Run a cost benefit analysis before changing your excess. Consider how much you use your cover, how many people are on the policy, and the types of benefits you’re likely to claim. For young singles who rarely go to hospital, a higher excess can be a no-brainer. For families with children who may be in and out of hospital or the dentist more often, a higher excess could mean paying more out of pocket when you claim. The savings on premiums may not stack up.”
The survey found that Gen Z (30%) leads the way in cutting health insurance costs by raising their excess to reduce premiums. They were followed by Millennials (21%), Gen X (14%), and Baby Boomers (9%).
Money.com.au is an Australian financial comparison platform founded by industry experts in 2019. Its goal is to provide people and businesses with financial education and access to financial products.