Just want to make sure my logic is right here - I currently have health insurance with Medibank and pay my premium monthly. I'm planning to change this to yearly because that money I'm paying to them each month could be in a bank account earning me interest all year albeit however small - point is, it's better in my pocket for as long as possible than giving it to them every month. Seems their direct debit only allows you to use a credit card if paying monthly so I'll need to switch to direct debiting a bank account, but I don't see that as a problem.
Health insurance premium from monthly to yearly
Partake0486 on 12/11/2015 - 23:20
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Your logic is upside down - insurance is payable in advance, so paying your premium yearly will mean you'll lose interest you would've earned on your savings (but most insurers will give you a discount for paying annually)
Yeah you're both right, I didn't consider it was actually being paid in advanced. Good thing I got feedback before I did it! I don't believe Medibank offer a discount for a yearly payment either.
Your best option for real savings is prepaying your health insurance in around March or so just prior to all the funds' scheduled annual increases in April. Most funds allow you to prepay up to 18 months premiums at any one time, and they give you pre notice of their scheduled rise (which is historically around 7%pa). And here's the kicker - you prepay at the exiting cheaper rates, and they don't/can't later ask you for the difference.
I've successfully done this on a number of occasions - you have to have a bit of cash/credit card limit to make it worthwhile, but at 7%pa (or 14% for months 12-18 assuming 2 years of big increases) it's saving much more than my cost of funds which is my mortgage offset rate. Just don't forget to pay off your credit card before interest. Or get a 0% balance transfer deal or cheque to self from Citibank/Virgin Money to fund it
^^^ This is what I do as well.
Took a look and my premium (I'm with Medibank) went up ~9.2% (~$10) this past April. So by prepaying, if you opt to do it March will they let you escape the rise the following month in April. If so that would mean escaping two premium rises. For example:
prepay for 18 months at your current monthly premium rate in March. Next month premium is increased. Next April premium is raised again and you're in your 11 month with 5 months to go.P.S. Anyone know if Medibank allows prepaying?
I think they can ask for additional payment/vary due dates in response to price increases its just that most if not all funds no longer engage in the practise. I have some vague recollection that it was commonplace a long time ago along with out of cycle increases. Hey, I even remember discounts for yearly payment.
Definitely prepay
Can't stand when politicians response to price hikes is too shop around. That's a given with or without price increase
But don't you pay the full year in advance, not at the end of the 12 months?
Assuming your premium doesn't increase for monthly payments then it'd be better doing the smaller payments by your logic.