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Many Australians see health insurance as a complex product and are worried they’ll make the wrong decision when making their purchase. Don’t worry – taking out health cover doesn’t have to be difficult!

However, there are some traps you should avoid.

Mistake #1. Buying the cheapest policy possible

Low-cost health insurance may restrict how much you can claim on treatments and services, some of which you may be keen to use.

  • Is hospital cover worth it if you’re only able to be treated as a patient in a public hospital?
  • What use is extras cover if your policy doesn’t cover a significant portion of the costs?

Our advice? Get health cover that delivers the value you need, or don’t get it at all. In particular, look at benefit limits to figure out how much you can claim on any given treatment/service per year.

Lucky for you, our comparison service will help you quickly dig into the finer detail.

Mistake #2. Believing that hospital cover isn’t worth it

Young Aussies may not think that hospital cover is essential for everyone their age. However, do you know how many of us ended up in the emergency wards last year?

  • Aged 15-24 years: 1,025,706
  • Aged 25-34 years: 1,029,611
  • Aged 35-44 years: 837,508
  • Aged 45-54 years: 760,907

Source: AIHW, emergency department care, 2015–16, page 20

Not every Australian needs hospital cover, but it’s not something you should quickly dismiss – especially since cover can cost relatively little, and help you skip public waiting lists.

Did you know… The average wait time for elective surgery through the public system is 37 days?

Taking out a hospital insurance policy also ensures that anyone earning over $90,000 potentially avoids the Medicare Levy Surcharge (MLS). If you’re worried about paying the surcharge, see if you owe it by using our MLS calculator.

Mistake #3. Delaying the decision to shop around

You might think you have all the time in the world to get health insurance. However, there are great reasons to seek out cover early.

  • Many health insurers waive waiting periods if you were previously covered under your parents’ policy if you stay with the same fund. That means you can immediately claim on all the things you enjoyed before. However, you may only have a short window of time after leaving your family policy to capitalise on this (e.g. one month).
  • Extras policies have waiting periods set by insurers. That means you can shop around to find the provider with the shortest waits for treatment.
  • Getting covered after you turn 31 may mean more expensive insurance. If you believe you’ll take out hospital cover at some point in your adult life, we encourage you to do so before you turn 30. Otherwise, you’ll pay more for hospital cover because of Lifetime Health Cover loading.

Up next: Don’t believe the hype. You only need to know 3 things about health cover & tax

How to choose health cover (without making any mistakes)

Now that you’re aware of the pitfalls to avoid when taking out private health insurance, here are some tips to help you find the right cover.

  1. Pay attention to your excess & co-payment. If you opt for a health insurance policy with a low-cost (or no cost) excess or co-payment, you’ll pay more in premiums. Conversely, your premium will be cheaper if you choose a more expensive excess or co-payment.
  2. Factor in tax rebates and levies before you take out cover. To help pay for private health insurance, many Australians can claim the Australian Government Rebate. That’s good news if the cost of getting covered has been keeping you on the fence.
  3. Study up on extras cover. You may be able to find a better value extras policy by looking for products that pay a percentage of each treatment (e.g. 60% of the bill), instead of a fixed amount (e.g. $40). Look for the ‘claimable returns’ section in your policy brochure for more information.

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