Health insurance myths busted

To get the most out of any health insurance policy it’s important you understand your cover. Common misconceptions can get in the way of that. 

A good health insurance policy gives you peace of mind knowing that you have assistance to get the treatment you need without possibly waiting for months or breaking the bank. But unfortunately health insurance is a financial product that’s often misunderstood. 

To clear the air we’ve taken a closer look at those misconceptions, and busted 10 common health insurance myths. 

Myth #1: I’m young and healthy so I don’t need health insurance.

Getting health insurance early can be a good idea for many reasons according to a spokesperson for Southern Cross Health Society:

“Young singles and couples are Southern Cross’ fastest growing segment, and these members are relatively active claimers. Nearly half (46 per cent) have made a claim in the last 12 months, evidence that health insurance is valuable to this audience.”

“Health insurance is also typically more affordable when you’re young.”

Myth #2: Health Insurance is too expensive for most people.

The good thing about health insurance is that policies can be tailored to you. Southern Cross’ spokesperson says there are plans for different budgets:

“More comprehensive policies ... provide cover for major medical expenses and specialist consultations.”

But if you’re on a tight budget then there are several more affordable options that offer "cover for day-to-day healthcare services (such as optometrist, dentist, nutritionist) and cost from $1 a day for under 35-year-olds.”

You may also be able to increase your excess to reduce the cost of health insurance or access it as a benefit from your employer. 

Myth #3: I don’t need health insurance. I can always get the health care I need through the public system or ACC.

The public health system and ACC offer excellent care for serious health conditions. However, if you have a non-urgent condition you may end up on a long wait list:

“Spending significant time on public health system wait lists can impact both your health and quality of life. Having private health insurance can help with the cost of these types of non-urgent procedures and provide faster access to private hospitals for treatment.”

Myth #4: If I have an existing health condition, I can’t get cover.

If you have a health condition before you take out a policy, otherwise known as a pre-existing condition, you can still get health insurance:

“Normally there is no cover for pre-existing conditions under a policy, unless a health insurer agrees in writing to offer cover for pre-existing conditions.”

Myth #5: If I cancel my policy today I can always just pick it up later.

You can cancel your health insurance policy at any time you like, but according to Partner’s Life head of industry engagement Mark Banicevich, picking up your policy later may not be so simple:

“If you cancel your policy, or if you change to a different insurer, you let your existing insurer off the hook. When you apply for a new policy it may load or exclude conditions that were covered under your original policy.”

Your premiums may also be higher if your health or the insurance market has changed since you cancelled your original policy. 

Myth #6: The chance of something happening to me is low, so I can self-insure/self-pay.

This do-it-yourself attitude is a common amongst us Kiwis, but according to Mark it can be misguided:

“Insurance exists precisely because the cost of certain events is much more than most people can afford to pay. The life and health insurance industry paid almost $700 million in claims in the three months to December 2021 alone – that’s over $200 million per month!”

The life and health insurance industry paid almost $700 million in claims in the three months to December 2021 alone – that’s over $200 million per month!

- Mark Banicevich

 

Mark adds that health and life insurance are about protecting your family as well as yourself:

“One-third of New Zealanders die before they reach 75 years old. Common surgeries can cost tens of thousands of dollars. Consider the cost to your family if you die. Not just funeral costs, but living without your income.”

Myth #7: If I claim, my premium will go up.

Once you’ve signed a contract with your insurer, your premiums may increase with age, but they won’t necessarily go up if you make claims, says Mark.

In some cases, your premium may go up by a certain percentage if you make a claim, however you may also be rewarded if you don't claim. Some insurers have a reward for low claims, meaning that if you haven't claimed, you may qualify for a reduction of your premium. 

Myth #8: If I have health insurance, I’ll be forced to go to a limited list of hospitals or specialists.

While some health insurers partner with a select number of medical providers to negotiate and regulate costs, Fiona Mackenzie, Brand and CX manager at Accuro, says you’ll usually have a choice and only quality providers are used:

“Not all health insurers require you to see a provider that they have partnered with, so it is worth checking the conditions of your policy before you join.”

“Most health insurers in New Zealand also require that the medical provider you are seeing is registered with the New Zealand Medical Council or other relevant body, to ensure that they are legally allowed to practise.”

Myth #9: Private health insurance takes away resources from the public system

It’s a common misconception that private health insurance creates strain on the public system by diverting resources away from it. But the truth is quite the opposite says Fiona:

“The private health care sector can take pressure off the public system by treating patients significantly faster. This means that it can treat conditions before they become acute.”

“A 2016 study estimated that this saves the public sector $100 million a year.”

Myth #10: Health insurance becomes unaffordable as I get older

Of all the myths out there this one has the most truth to it. Health insurance premiums do tend to increase annually due to a number of factors, Fiona says, which include “the increasing age of members on the policy and the rising claim costs that come with advancements in medical procedures, technology and treatments.”

But Fiona adds that while health insurance may cost more as we age it also becomes much more valuable:

“As we get older, we are much more likely to claim on our health insurance and for more expensive treatments/procedures.”

Despite that, there are several ways to reduce your premiums, from increasing your excess to adjusting your level of cover or changing your payment frequency or method.

Interested in learning more about insurance? 

• Take a look at our resources page
• Download our Health Insurance PDF
• Watch our video on insurance and mental health with Sharron Botica