Lack of health cover can be stressful and costly
OPINION: Do you have a solid financial plan in place to create, protect and grow your wealth? What if something unexpected occurred? In this series, Rival Wealth examines the nine fundamental steps we believe you need to take to achieve financial health. Step six is health insurance.
Renee
Renee is determined to own her own house within the next two years. To achieve her goal, she’s had to significantly tighten and prioritise her spending. When weighing up the options of what to insure, Renee has decided that she can’t afford private health insurance now. She’s weighed up the risk factors, but still feels uneasy about her decision.
Her dilemma is what if she develops any illness between now and getting health insurance, as this will be classed as a preexisting condition by a future insurer. Renee needs to accept that any potential illness – that could be life-threatening – will not be covered until she has health insurance in place, and this is not sitting well.
Renee’s father has health insurance, so when he was hospitalised recently, he was able to access very expensive nonPharmac drugs. Because his severe medical condition is covered by health insurance, the continued costs his health insurer will meet far outweigh his premiums. He has decided he will never cancel his health cover due to the recent benefits.
This meant he recovered faster because he had the best treatment available. So, Renee wants to get health insurance very soon when money isn’t as tight to cover any future pre-existing conditions.
Top tip: You can reduce health insurance premiums by choosing options that suit your situation.
Warren and Judith
Warren and Judith both receive free medical insurance through their employers. Warren is covered for medical and dental care while he is employed for the NZ Army. Christine has had full medical cover, including for preexisting conditions, since she started working for a major bank 25 years ago.
This cover has proved invaluable, as both Warren and Judith have made several highvalue claims over the years. Warren’s had both his hips replaced and Judith has received various treatments for a heart condition and varicose veins. For the last six months, Judith, a keen runner, has been experiencing hip pain. According to her specialist, she too will need a hip replacement within the next four-to-six years.
Although she can go on the public hospital waiting list, she’s relieved to have private medical cover, because it will give her more control over the timing of her surgery.
When Judith retires from the bank, she will have the option to continue her existing medical cover. Her policy will no longer be fully funded, but all her existing ailments will still be covered, and she could reduce her premiums by having a higher excess.
Top tip: Join group schemes whenever possible and take advantage of group rates. Often premiums are lower and sometimes pre-existing conditions will be covered.
Darryl and Christine
Darryl is fundamental to their restaurant’s success and they are therefore hyper-aware of what could happen if he was in an accident or struck down by illness.
While a natural advocate of the public health system, nurse Christine is also privy to the enormous pressures it can come under. Every day she sees the benefits that private health insurance can provide.
Recently Darryl’s younger brother had a growth removed from his abdomen. Luckily the biopsy revealed it was benign. Now the whole extended family are considering health insurance. Christine realised how motivating it can be when someone close to you gets sick.
Darryl and Christine are looking good financially so have decided to add their children to their existing health policies – an extra $5 per week. The advantage for their children will be that future medical conditions are covered. In other words, when the kids become adults, they can continue their cover and not have to worry about re-applying for insurance which would not cover any pre-existing conditions they developed in their childhood.
Top tip: Self-insuring might seem like a good option until you discover common surgeries like hip replacements can cost over $25,000.
Private medical cover will give Christine more control over the timing of her surgery.