Cameron Irvine, Financial Adviser/Investment Coordinator at Lifetime, asks the question: is health insurance really worth it?
Health insurance can be expensive, so it’s hard to justify paying money year after year for something that may not be used at all. To answer if it’s worth having health insurance, we need to know three things:
- How much does it cost?
- What do you get for it?
- What’s important to you?
1. Let’s start with the costs
Health cover can be costly, but not always and not for everyone. For example, a 70-year-old couple could potentially get some minimal health cover for around $75 per week. Generally, 65-year-olds are likely to get a more affordable rate, while 75-year-olds will probably pay more. There are options to help adjust the costs too, such as adding or removing certain features, and especially changing the excess that you pay. A $500 excess will always have much higher premiums than a $4,000 excess for the same cover. It is a great idea to increase the excess with age, that way people can keep their cover for big-ticket expenses; hip replacements are expensive, for example, but it’s worth knowing what you get for that price.
2. What You Get
Private health insurance allows you to skip the public system queue. This means if you are diagnosed with stage 2 bowel cancer, for example, you don’t have to wait to get treatment; in some cases, the time you gain not waiting in the public system could be the difference between life and death. With private health insurance, you also get access to more treatments – and some of those treatments are far better. All in all, you have less worry, less waiting, and more certainty about your future. You effectively pay to have a higher quality of life and have more years to enjoy it.
3. What’s Important to You
An article can’t tell you what is important to you – only you can do that. Many people tend to share common values though, such as family, community, loyalty, financial security, and personal growth. These are all things that tend to be supported by insurance in the later years of life. Financial security can be addressed from insurance because you can get access to more expensive and better treatments through insurance, when you otherwise couldn’t afford to do so. Personal growth tends to end if your health is in decline, so by maintaining your insurance you can keep your health up.
Whether or not to have insurance depends on everyone’s individual situation. If you want a general rule of thumb, here is one:
If you’re 65 or younger, health insurance probably makes sense.
If you’re 66 – 75 health insurance may or may not be worth keeping.
If you’re over 76 health insurance is probably too expensive and not worth keeping.
If you have a group scheme through your employer, it probably makes sense.
Ultimately, it’s a decision that should be made with people you trust and that understand the costs and benefits, like a financial adviser.