Choosing the right Health Insurance

Health insurance, like investments are one of those products where your own personal situation determines the health insurance that is right for you.  It depends on age, personal well being, as well as habits such as the amount of exercise one does as well as do you smoke etc.

In some countries the health system is so good that private health insurance is unnecessary.  In Australia the public health system is free and very good however there is a major tax penalty for not having health insurance if you earn above $80,000 as a single or $160,000 as a couple (1% extra tax).  In other countries the health system is such that it is almost essential to have health insurance to be able to have peace of mind that they will not be sent broke if they ever get sick.

The issue of having adequate cover was brought home to me because someone close to me was diagnosed with cancer and thankfully they had the right level of cover which meant that we were not worried about the financial side of it at all and the health insurance fund that we had was great (it was HCF).

Health insurance is (at the most general level) made up of Hospital cover and Extras cover:

• Hospital cover is essential: This is one area that should not be skimped on.  Hospital cover and the ability to get your own room or admission to a private hospital without extra charges (or very low charges is key).  I would make a table of all the health funds that provide coverage in your area, find out which hospitals they cover and how long the coverage is for (or after how many days it kicks in)
• Extras are where the bells and whistles come in:  Generally speaking if you have the same level of hospital cover at different funds the prices will be pretty similar.  Health insurance funds tend to differentiate themselves with the extras.  Extras are however the things that are most subjective.
• Always check the exclusions:  Exclusions are almost always in the fine print that no one wants to read but you do not want to get a serious illness and then find out that you have been paying your premiums for years for no benefit.  For myself - I try and make sure that the really obvious things are not excluded (cancer, heart disease etc.) and at the same time try and find an insurer which excludes as little as possible.
• Check the waiting periods: Most funds have waiting periods before you can claim anything however many offer specials with no waiting period and you can immediately benefit (such as by buying new glasses / going to the dentist etc)

Now that you have found several policies that you think work for you on hospital cover and the exclusions are not too bad then the next step is to work out how much you want to pay for the extras.  I listed a few questions below which should help narrow the field.

• How active are you generally?  This is a two sided coin - it will keep you healthier for longer but will also mean that you are prone to accidents and sports related injuries.  Having decent extras cover for things like remedial massage could work out really well for you if you are pretty active.  On the other hand if you are not active I don't think you will ever make use of remedial massage so it's a pretty useless feature
• Do you wear glasses or contact lenses?  The most use I make out of my health insurance every year is for my contact lenses and glasses.  My insurance premiums come to approximately $1,500 per year and I get ~$300 of value purely from the glasses cover which reduces the effective cost of the insurance quite substantially
• Do you go to the dentist often?  Dental cover varies quite substantially between funds so if you are a person who tends to have trouble with their teeth then check this before signing up. 
• Are you likely to get pregnant?  As a male the answer for me is probably no.  So I avoided those funds with excellent features for pregnant women because I would be paying for features that I'm never going to use

The list of considerations for extras goes on and on.  Above are the just the obvious major points but my point was that you really need to consider your own situation and where you get the best value.  One thing that I want to stress is that it does not pay to be cheap with health insurance.  The potential downsides are just too high and money is one thing you do not want to be worrying about in an emergency.