Australian families currently spend $392 per month, or 8.8% of their disposable income, on health cover; but this could skyrocket to a massive 20% of their income in 2051, according to a Finder.com.au analysis.
Insurers have increased their premium by 5.42% on average every year since 2010 – during which period, wages have only increased by an average of 2.86% each year, the comparison website said.
Bessie Hassan, insurance expert at finder.com.au, said the steady increase in insurance prices is putting a significant strain on Australian families.
“Currently, the average policy costs families $392 a month, while the average monthly disposable household income is $4,455,” Hassan said. “This means that families with private health cover spend, on average, around 8.8% of their disposable income on health insurance each month.”
Finder said that if premiums continue to grow faster than wages at their current pace, an average Australian family would be forking out about 10% of their disposable income on health cover by 2023, and 20.2% by 2051.
“Although this year’s premium increase is the lowest it has been since 2001, it’s still double the rate of wage growth,” Hassan said. “If increases continue at the current rate, health cover will become increasingly unjustifiable for many Australian families – especially since the average policy is forecasted to reach $2,354 in 2051.”
To reduce health insurance costs, here's what brokers should advise their clients:
- Pay only for the cover you need. “If you’re on a couple’s policy it may be worth taking out two single policies if only one of you requires top hospital cover for pregnancy,” Hassan said. “The same applies to extras policies; one person may want comprehensive extras for optical and major dental while the other may not need a policy if they only visit the dentist twice a year.”
- Pay 12 months up front before April. “You can lock in 2017 prices for a whole year by paying your annual premium up front before the price hike on 1 April,” Hassan said. “Often health funds apply an additional discount if you pay on an annual basis.”
- Compare policies to get the best deal. “The average Australian stays with their health fund 11.8 years on average, so if you haven’t reviewed your cover in a while it’s worth checking out online what other funds are offering and whether you can find the same cover for cheaper with a different provider,” Hassan said.
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