How to lock in your health insurance premium

Many Australians are bogged down by their monthly insurance bill, but there’s a way you can avoid a pesky price hike in one simple step.

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There is a nifty little trick private health insurance customers can use to delay any premium hike until as late as April 2024.

The government announced the average health insurance premium increase for 2022 would be 2.70 per cent, leaving thousands of Australians feeling the financial pinch.

A tactic called ‘locking in your premium’ could help you save. Here’s how.

How to freeze health insurance premiums and save

You can effectively freeze your health insurance premiums by paying a full 12-18 months upfront at the previous year’s rate before your insurer’s premium hike deadline, which may be April 1 or possibly later if there is a deferral in place.

To lock in your premium at the current rate, your policy must start and your annual payment must be processed by the bank before your insurer’s premium hike date.

Keep in mind banks can take up to six days to process your payment, so make sure you don’t leave it too late.

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What to consider before locking in your premium

iSelect spokesperson Sophie Ryan said ‘freezing’ your premium can help alleviate the financial stress that comes with the annual price hike.

“If you are in a position to do so, prepaying your annual premium upfront for the full year before your increase takes effect will lock in your current rate and help you. avoid the 2022 premium increase for another 12 months, ”she said.

“By paying in advance, prior to a premium increase, you could save money because you essentially delay having to pay the increased premiums for up to 12 months if your insurance premium goes up in 2022.”

Ms Ryan advised customers to check over their finances to ensure they can afford paying a year’s worth of insurance upfront.

“Before choosing to lock in your premiums for 12 months, consider whether or not you can afford to do so,” she said.

You might also have to look around to see what prices other insurers are charging to see if you could find a better deal elsewhere.

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Two years of premium savings up for grabs

Australians can save even more money by pushing back the premium hike for as much as two years.

In the wake of the pandemic, multiple health funds have introduced premium deferrals that allow customers to pay 2021 prices for another 18 months to two years.

The longest deferral is from Australia’s third largest HCF fund, which has deferred price hikes until November 1.

The not-for-profit’s move means you could lock in 2021 premium prices until as late as April 2024.

HCF CEO Sheena Jack said their focus has always been on their members and maximizing affordability.

“While we’d love to have no premium increase at all, what we can do is keep those premiums as low as possible – this year’s increase will be the lowest in 20 years,” she said.

“In addition, we’ve committed to deferring our premium increase for seven months, or until November.”

Ms Jack said they want their members to have options that suit their needs and circumstances.

“One of those options is to make a payment up to 18 months in advance from the date of payment, effectively locking in their current rate for that period of time,” she advised.

“Members can take advantage of the current rate freeze by making an advance payment any time before 1 November 2022.”

“It’s one way we can step up to support our members by meeting their needs and budgets better than anyone else.”

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When should I lock in my premium?

If your premiums are due to go up on April 1, the best time to lock in your premium is by mid-March, as some banks might take up to six days to process your payment and some insurers have a cut-off date before April 1.

Remember you can lock them in any time before April, but check with your insurer to confirm its cut-off date to avoid missing your chance to save some cash.

You might find yours insurer isn’t increasing premiums for another six monthsgiving you more time to consider your options.

What are the benefits of locking in my premium?

Australians with health insurance can automatically get an annual discount by locking in premiums, as that’s an easy way to avoid yearly premium hikes.

By paying upfront for the next 12 months, it means you have one less monthly bill to worry about which could save you both time and stress.

However, it’s important to remember whether you are in the financial position to pay for the year ahead of time.

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