Don't put your health at risk

Insurance premiums are rising, but a policy check-up may help reduce costs.

Health fund members feeling the pain of the average 6 per cent increase in premiums that kicked in at the start of the month may feel tempted to take the scalpel to their polices. But they're being warned that some ways of cutting health insurance costs are safer than others.

Restricting benefits, or even excluding certain treatments and procedures, is one way for insurers to reduce premiums so care is needed if you are to avoid ending up with a policy that's next to useless.

As with other forms of insurance, the cheapest policy isn't necessarily the best one and consumers should be aware of this when using online comparison sites.

The Private Health Insurance Ombudsman (PHIO), Samantha Gavel, says that rather than purchasing on price alone, she would "advise people, when they're making any decisions about health insurance, to think about their own health needs and preferences.

"You [may be] getting a cheaper premium but the reason is you're trading off something that you could need access to," she says of policies where savings come from exclusions and restrictions.

The general manager of corporate affairs for the online health insurance broker iSelect, Rohan Martin, says less expensive hospital policies may not cover common services such as obstetrics.

That could be a great way to economise if you're a single male or you're in your late 40s and you've completed your family but it's not a good option for younger people, who might be better served by excluding a treatment such as hip replacement.

The director of health insurance portal OzeCover, Peter Carroll, says exclusions will save you only modest amounts but introduce greater risk than other economies you could make. "Some exclusions that are offered I'd never suggest people take - for example, cardiac procedures," he says.

Martin says people thinking about changing their cover need to consider their state of health, their needs not just today but into the future, along with any tax implications.

Under the Federal Government's "lifetime health cover" rule, introduced in 2000 with the aim of encouraging people to take out health insurance at a younger age, individuals have to pay an additional 2 per cent of premium for every year they delay joining a fund beyond the age of 30.