TAGS

How age affects Health Insurance Premiums

The Age Factor in Insurance Premiums

There’s no doubt about it: we have an excellent health system here in New Zealand. If we have an accident, ACC can help to cover our treatment costs and compensate a portion of our lost wages. If we suffer any illnesses, the majority of our treatment costs is covered by our government-funded healthcare system. Because of this, a lot of people forego personal health insurance.

This doesn’t always work out best in the long-run though. While our health care system will usually cover our medical expenses, it doesn’t cover the other expenses that come with having an illness or significant injury such as loss of income, travel for treatment, and childcare if you have dependents. Health insurance can often provide the finance required to cover these additional bills. Health insurance also allows you to skip the wait lists associated with public healthcare. Read more on the benefits of having health insurance here: https://www.nzadvicegroup.co.nz/blog/post/45606/Why-bother-with-Health-Insurance/

Once you’ve made up your mind to invest in health insurance, it’s time to start shopping around and comparing rates. This is where it can get interesting because the health insurance premiums you are quoted can vary significantly from company to company. But so too do the terms of the policy. This is where we as advisers can really help!

How are health insurance premiums determined?

Why is it that some people pay less than others for essentially the same health insurance coverage? Well, there are quite a few determining factors that insurance companies take into consideration when calculating premiums. Some of the most common determining factors include the applicant’s age, gender, smoking status and family medical history.

Why? These factors all influence your likelihood of making a claim. In the insurers’ eyes, the younger you are, the cheaper your premium will be since the chances of you making an insurance claim is at its lowest.

How does your age affect your premiums?  

Anyone looking for health insurance should note how your age really comes into play when determining your insurance premiums. The reasoning behind it is that younger people are generally ‘healthier’ and less likely to end up needing hospital time. And therefore the cost to acquire coverage reflects that ‘logic’. As a result, premiums are adjusted to balance the risk accordingly as you get older and closer to your life expectancy.

One important point to note when considering/comparing life insurance policies, is that it’s best to consider not just the current premiums being quoted, but also what your premiums are likely to be in the future. This way you’ll know you’re not just getting a bargain for the first year.

Why getting insurance younger is wiser  

With age playing such an important role in policy costs, it’s best to apply for health insurance at a younger age, while you are considered least likely to encounter health problems. There is also a greater chance of securing a policy without exclusions.

Since it costs the insurer money when a customer makes a claim, it really does make more business sense (on their end) to charge more as you get older. The more a plan is likely to be used and less if they aren’t.

At the end of the day, the whole idea of securing health insurance is to cover any unplanned medical emergencies with the least financial upheaval to your life. So, if you’re young, it’s best to buy insurance now.