Young people are feeling more and more pressurised to buy private insurance cover once they turn 31, but does it make financial sense? The answer according to Australia’s leading consumer advocacy group Choice is a big no. They believe the move could impact negatively on their financial well-being.
After looking at insurance data dating back to 2001, the non-profit organisation has concluded that a customer would be better off taking insurance only when they need it, even if it meant paying the 2% Lifetime Health Cover loading charged by the government. The penalty adds 2 per cent to future health premiums for every financial year a person fails to buy private hospital cover once they turn 31. However, this applies only to the first ten years of premiums.
According to Choice director of campaigns and communications, Matt Levey, the amount you would save by delaying purchasing insurance would be more than the 30% penalty you would incur if you acquired hospital cover at 45 years of age.
In fact, the analysis by Choice found that if you put the money into a savings account, you could wind up better off by $2000, depending on which state you reside in.
“If young Australians feel pressured into buying health insurance just to avoid a future financial penalty they may end up opting for the quickest, easiest option rather than considering the best value product for their particular needs,” says Levey while speaking to Australia’s news. com.au. He believes that the Federal Government’s priority should be to simplify health insurance and give better value.