Health insurance, like all forms of insurance, works on the basis of the insurance company accepting to take on a risk in return for the payment of a premium. The higher the degree of risk, the higher the level of premium that will be required. Whilst the exact science of this is calculated by highly skilled actuaries, the general principle with health insurance is that the older you get the more of a risk you represent and the higher your health insurance premium will become. The term which is commonly used in the industry to classify people on the basis of age is ‘age banding’.
Generally speaking, premium increases through the majority of life are not too steep. However when people hit their late 50’s all of a sudden health insurance premiums start to shoot up. The following article will look at some ways in which you can reduce your health insurance premiums.
1. Increase your deductible. By increasing the amount that you are willing to contribute to each claim you make, you can drastically reduce the premiums you pay. Insurance companies’ deductible options will vary on an insurer to insurer basis, so make sure you ask your agent to present you with the best options to suit your needs. There is no right answer as to what deductible you choose to accept. It’s a question of what you are most comfortable with and what amount you can afford to cover yourself, before the insurer steps in and covers the remainder.
2. Remove Outpatient. Moving to an inpatient only plan will still provide cover for the big ticket issues which require a stay in hospital, but will remove cover for outpatient visits. Whilst having outpatient cover is a nice luxury to have, one does pay a significant amount more in premium terms to access this cover. By moving to an inpatient only plan you can make savings on your health insurance. It’s down to you to assess whether these savings will be more than what you typically spend on outpatient hospital visits over the course of a year.
3. No Claims Discounts. Some insurers offer no claims discounts where you are rewarded for not making claims with a premium discount. This can amount up to 25%. If you move over to an inpatient only plan then the chances of accruing no claims years are increased allowing this discount to be triggered.
4. Cut back on benefits. If you are looking to cut your premiums down then moving to a plan with reduced benefits will facilitate that. You will pay extra to access cover for the likes of dental, optical, and wellness cover. Considering what benefits to reduce is a decision which should not be taken lightly as compromising on inpatient benefits could leave you in a bad position, if you require cover for serious illness.
5. Work with an agent. Getting to know your agent and working closely with them can help you save money and get the best value products. Agents know the market and understand the products on offer, so make sure you find one who has your best interests at heart.