The Overlooked Money-Saving Secret for Your Medical Insurance

Don’t cancel it – choose an excess. This change can save you hundreds, even thousands of dollars.

Many people consider cancelling their medical insurance due to rising costs, unaware of their options. This concerns me because once you cancel your policy, it can be difficult to get it back.

With a growing population needing medical treatments, the pressure on our medical system will only increase. It’s crucial to maintain your coverage for when you need it most. Choosing an excess is my first money saving tip to help you keep your medical insurance – often overlooked, it feels like it’s a secret.

Money Saving Tip #1: Choose an excess

What is an excess?

An excess is your contribution to the cost of private medical treatment before the insurer covers the rest. This risk-sharing allows you to balance your budget effectively. This can range from $0, where all is paid by the insurance company and is the most expensive option, to $10,000, the least expensive.

How much can I save?

Savings vary by insurer, but some can offer up to 60% off the cost of your premiums.

When should I raise it?

Start by setting enough aside enough funds to cover the excess. Building an emergency fund now is crucial for this purpose. While you are young and the premiums are lower, it makes sense to have no or a low excess since you may not have the money ready to pay for a high excess.

When you are approaching or in retirement a higher excess is a great way of reducing this expense while preserving your nest egg from expensive treatments when the public wait list is too long or won’t pay for what you need.

What are some of the risks?

Multiple claims:

You need to check your policy to understand how often you will pay your excess. If it is paid per claim, then you will need to make sure you have an emergency fund ready to cover multiple excess payments.

Medical Assessment:

You can easily request a higher excess. But when you want to reduce the excess a medical assessment is usually required because you are increasing the risk to the insurer. Caution Is required here because you may not get the same terms you had before.

Bonus Saving tip - Single excess policies:

Great policies like the ones we work with usually have an annual excess. This gets paid once per policy year – or better yet per claims year for some. What this means for you is you only need to fund one excess per year. If you’re having a bad run, you can have multiple procedures and only pay one excess – a massive money saver.

Summary

With an emergency fund and strategic savings, choosing an excess can save you thousands of dollars as your premiums increase with age. It is important to find out how you can keep your medical insurance because you will increasingly need to use it.

Remember, it is a lot easier to beg or borrow a few hundred or even a couple of thousand dollars than it is to borrow hundreds of thousands of dollars, take it from your retirement, or ask on a give a little page.

This is the first in a series of money saving tips as promised in my last article.