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Pros and Cons of Switching Health Insurance

Pros and Cons of Switching Health Insurance
Megan Fraser Updated: 02 March 2022
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With the upcoming private health insurance premium increase, you may be thinking about the advantages and disadvantages of switching health insurance providers. Alternatively, there has been a significant change in your circumstances, and your current cover no longer meets your requirements. Whatever your reason for changing, it’s a good idea to consider all of the factors before you switch.

Key facts

  • Benefits of switching your insurance include new member discounts, lower premiums and better coverage.
  • Drawbacks include the loss of loyalty rewards, not being covered for the same benefits included in your old policy and losing access to your previous insurer’s provider network.
  • The best time to make health insurance changes is in peak periods in March and June.
  • You won’t need to re-serve waiting periods if your new policy offers the same cover level or lower.

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Advantages & Disadvantages of switching health insurance

  • If you’ve changed insurers or policies, but you’ve maintained a similar cover level, you typically won’t need to reserve your waiting periods.
  • You will generally need to serve full waiting periods as stated in your policy documents if you upgrade to a higher cover level.
  • Your Lifetime Health Cover (LHC) loading generally won’t be affected if you move to a different fund. However, this is only the case if you maintain Hospital cover in the future.
  • If you incur more than 1,094 days without cover while looking for a different insurer, you may be required to pay the LHC loading when applying for a qualifying policy.
  • Certain insurers offer new members a variety of sign-up bonuses. For instance, AIA currently offers new members up to 8 weeks of free cover* if you apply for an eligible policy before 31 March 2021.

    *T&Cs apply.
  • You may lose out on specific loyalty bonuses offered by your insurer.
  • By reviewing your health cover provider, you’ll be able to look for a policy that offers benefits suited to your current phase of life.
  • In some instances, your older policy may have benefits not currently offered. If you switch to a different insurer, you’ll lose those benefits.
  • You could potentially cut your out-of-pocket costs by looking for a provider that offers complete cover for specific benefits that are important to your circumstances.
  • If your new insurer uses a provider network, you may not be able to see the doctor of your choice.
DealEligibilityExpiry date
Deal Up to 6-weeks premiums back* Eligibility New members Expiry date 31 July 2022 Get Quotes Now
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Deal 4 Weeks free* Eligibility New members Expiry date 30 June 2022 Get Quotes Now
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Preparing to change insurers

switching health insurance

When is the best time to switch?

Although there is no right time to change your health fund, there are a few times each year when you may find a better deal than at other times. The first period is in March before the annual premium increase on 1 April. The second peak period is June before the LHC loading kicks in for 31-year-olds on 1 July. If you move to a different health fund at this time, you may be able to take advantage of several discounts and promotions.

A step-by-step guide to switching insurers

  • Compare quotes: Evaluate several quotes from leading health insurance companies and then compare these to find a policy best suited to your requirements.
  • Apply for cover: Send your application to the new insurer and ensure that you’ve paid all premiums on your old policy. You may also want to inform your new fund that you’d like your new cover to start as soon as your old policy lapses.
  • Get your documentation together: You’ll generally receive a clearance or transfer certificate from your old insurer. This document outlines your current coverage and should be finalised in the first 14 days after you’ve submitted the request.
  • Cancel your current cover: Inform your insurer of your intention to cancel your cover. They’ll end your cover and will generally refund any premiums you’ve paid in advance.
  • Begin your new cover: Once you reach the new commencement date on your policy, your coverage will begin, and you’ll be covered for the benefits laid out in your documents. At this time, the fund will also begin deducting premiums from your bank account.

What happens to your waiting periods when you switch?

This generally depends on your current policy and the type of policy you’ve applied for. If your new policy is of a similar level or lower than your current policy, you generally won’t need to complete waiting periods again. However, if you opt for a higher level of cover, you’ll need to serve the waiting periods outlined in your policy documents. If your switching Extras cover, you’ll need to serve all waiting periods again.

Frequently asked questions and answers

  • Can you change your health insurance policy at any time?

    Generally, there are no restrictions on when you’re allowed to change insurance providers. If you find that your current health fund no longer serves your needs, it is your right to change to a fund that meets your requirements. However, you have the responsibility to compare quotes from leading health funds to find a policy that suits you.
  • Can you transfer your health insurance to another company?

    Yes, you’ll typically be able to transfer your health policy if you choose a policy that offers the same level of cover or lower. Generally, your previous insurer will handle the transfer by sending your policy details to your new fund. Or, you could handle the transfer by yourself.
  • Can you have two health insurance policies?

    Yes, there are no rules that state you need to have Hospital and Extras cover from the same insurer. It’s generally a good idea to compare Hospital and Extras policies from leading insurers to find the right option to suit your requirements.
  • Will you get a good deal if you switch after the premium increase?

    Yes, you may still be able to find health insurance for an affordable price after premiums increase on 1 April. However, most funds offer their best deals in the month before the increase. If you are thinking about reviewing your cover, the best time is the month before the premiums are set to rise.
  • Should you switch your insurer because of the premium increase?

    This typically depends on your circumstances. If the premium increase means that you’ll no longer afford your premiums, it might be a good idea to review your coverage. Compare quotes from leading insurers to find the right policy to suit your requirements.

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