Is private health insurance useful or useless?

What comes to mind when you hear the words ‘private health insurance? Maybe expensive, waste of money, or necessary?

Private health insurance was something that was drilled into me as soon as I turned 18, with the notion that it is better to get it now, than when it’s too expensive at a later date. But do I need it?

There is a constant debate in my head every time I see that ridiculously large sum come out of my bank account each month about whether this is really worth it.

As of December 2018, 45.6% of Australians paid for private health insurance. While this should make me feel better about keeping mine, the fact is only 541,136 of those people are aged between 20 and 24.

So, do I keep it? What am I gaining by spending this much money every month, money that could be used for more immediate issues?

Looking closer at the pros and cons of private health insurance shows me that, while I can pick my own doctors and hospitals, as well as avoid the Medicare Levy Surcharge come tax time, I am also spending a lot of money per month for complex policy information that is challenging to understand, as well as a lot of excluded treatments that don’t come with my package.

Speaking to my immediate circle of friends, I noticed that they all were happy to stay on their parents’ health insurance for as long as they could. Which, by law, can happen until they’re 26. So why did my parents push so much for me to get it at the age of 20?

The simple reason was that, once you reach that threshold of 26, your insurance premiums go up substantially if you didn’t acquire it when you were younger. So, I suppose they were just trying to save me a couple of bucks. 

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I have had my private health insurance for more than a year now and haven’t used it for anything major, which makes it seem like my money is going to waste. The only comfort I get out of seeing that lump sum diminish from my bank account is that IF something does happen to me, I will be able to afford the treatment that I need.

The question is, can you base a big investment like private health insurance on the ‘what if’?

One comment on “Is private health insurance useful or useless?

  • You would be better off putting that money in advance, into investments, even a home loan would do. At 3k a year, you will have ample savings to deal with just about any situation imaginable, and by the time your 50, that extra 100k on your home loan is signifcant if you didn’t have too many expensive medical problems over your life.

    Private health insurance is for people who are bad with money and aren’t smart enough to save and live pay check to pay check their whole lives, as most Australians do. Remember, like all insurance, you lose in the long run.


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