The inheritance that might cost you money

IT’S the one type of inheritance that can actually cost you money.

New research has found that more than a quarter of Australians inherit their health fund from their parents, giving little thought to whether it is the best plan for them as individuals.

The survey of 1400 Australian adults with health insurance by Finder.com.au revealed 28 per cent of us are still in mum and dad’s health fund, while only a third of those who inherit their cover switch to a different insurer or ditch the cover later in life.

The research also found that women are more likely to be influenced by their parents, with 30 per cent of females inheriting their policy, compared with 24 per cent of males.

Once in, we rarely change, with previous Finder.com.au research indicating Australians stay with a health fund for an average of 11.8 years. That’s two years longer than we stay in each family home on average according to CoreLogic data.

Australian adults can remain on their parent’s fund until age 25 and sometimes longer if they are studying full time. Those still living in the family home are more likely than renters and homeowners to be in their parent’s fund, at a ratio of 47 per cent to 25 per cent.

Disengagement with health insurance among young people is no surprise to Finder.com.au spokeswoman Bessie Hassan.

“Health insurance is so confusing for many Australians, it’s no wonder they are looking to their parents for guidance,” Ms Hassan said. “When you ask many young Australians why they have health insurance in the first place they’ll tell you their parents told them they needed it and they were ‘guilted’ into signing up.”

Young Australians now have more incentive to engage with health insurance, after the Federal Government recently announced reforms that would see youngsters eligible for discounts of up to 10 per cent on their premiums for signing up for a hospital before age 30.

Ms Hassan noted that while the reforms would encourage more young Australians to sign up for cover, it was important that they compared funds to understand policies and get the best deals.

“With the average single hospital policy costing around $2000 a year it really does pay to do your homework and compare all options,” she said.

Sheena Jack, CEO of nonprofit health fund HCF, said the system’s stability relied on getting people engaged at an early age.

“The introduction of a lifetime health cover discount for young people is a great initiative,” Ms Jack said. “Empowered consumers are a win for everyone. Consumers with the right policies will be better covered and have their expectations met when they come to claim.

This reinforces the value of private health insurance.”