DIY Insurance - as in Saving What Premiums Would Be - Does/Has Anyone Done This?

bargain huntress on 09/03/2021 - 18:56

just asking out of curiosity really

i spend so much on the best health insurance you can buy only to find semi regularly they pay f all and i still have to pay thousands on top

it makes me often ponder if i would be better off automatically saving the premiums in my own account instead of automatically paying it to meanibank
and then 'self funding' my health stuff out of that account

and then i wonder the same thing about all the other insurances in the world

i mean basically when you have insurance you are gambling against the insurance company right?
if you saved instead, as long as you have the discipline not to touch it for other reasons - wouldn't you win as long as you didn't have a disaster in the short term?

thoughts? experiences?

Financial

Comments

  • md333 on 10/03/2021 - 17:28
    +1

    I've been attempting to do this for dental.
    Extras policies seem to be quite generous for regular checkups (that shouldn't need to be insured since they are predictable) but practically nothing for major stuff like crowns that could be a large unexpected cost. I've been putting equivalent of a cheap extras cover aside. Currently have several thousands there, partly because I keep forgetting to use it when I actually do pay for dental.

    Other stuff like cars and houses I just choose a large excess where it reduces premiums, so covered for losing the entire house/third party damage etc. but effectively self insuring the small stuff (less than excess).

  • Noblejoker on 10/03/2021 - 17:45
    +1

    Just a heads up piece of information to consider from someone in the industry
    General Insurance for things like Car and House are rated on your own risk factors
    Where you live, car you drive, accident history, what the house is made of - that sort of thing
    Insurers use data to set prices etc.
    Of course they want to make a profit overall, but do expect a few will cost more than they make even after no Claim Bonus, Excesses etc
    And they can reject risks they don't like (within reason)

    I don't consider Health Insurance the same way
    Everyone is entitled to cover
    They charge extra as you age and become more likely to use ( except for that held cover from 30 or younger penalty)
    They don't charge extra to those who become unwell and claim a lot
    So of course the system is flawed and expensive - we all have to pay for those who need it
    This would be better done via an effective tax or other mechanism than outsourced to insurance so Govt, Doctors and Insurers can pas the buck

    Ditto your Greenslip/CTP and Workers Comp aren't really insurance - they are a tax which is outsourced to insurers to collect

    TLDR - General Insurance and Health Insurance are not the same thing

    • SD2310 on 11/03/2021 - 20:10
      +2

      “ This would be better done via an effective tax or other mechanism than outsourced to insurance so Govt, Doctors and Insurers can pas the buck”

      Good idea, perhaps we could call it something like Medicare?

  • brad1-8tsi on 10/03/2021 - 22:42
    +2

    I self insured (banked) my health care insurance for 6 years from 1994-2000. In 2000 I busted an ACL playing social tennis. The ACL rebuild cost around about the same as I had in the bank ($8k). I took out insurance after that.

    • bargain huntress on 10/03/2021 - 23:54

      thanks for posting

      it was the same amount anyway, so why did you decide to get insurance?

      • Ughhh on 11/03/2021 - 00:29
        +1

        What if it was something more expensive than ~$8k?

        • matt_will_fix_it on 11/03/2021 - 07:20

          Or something happened more often than 6 years

      • ihbh on 11/03/2021 - 08:39
        +3

        He'll only get older and more injury prone. Health insurance premiums don't increase with age. They should because the risk increases (political decison).

      • brad1-8tsi on 11/03/2021 - 14:25
        +1

        I was about to turn 40. I'm an active person . I had a 3 yo child and a wife who was also active.

        I thought for the level of risk projecting forward 10-15 years was higher than the premiums.

        We have a great public health care system in Australia but I felt it gave me options.

    • dvd107 on 12/03/2021 - 20:15

      And this is why you should have private health insurance.
      I know of a younger person in their 20s, took 12 months on the public hospital wait list for their ACL repair when could have been repaired immediately with PHI.
      It's a matter of perception and value.

  • Ronerrlaw on 10/03/2021 - 23:38
    +1

    Depending on the age of your car and value comprehensive insurance may be worth it if your car gets written off, the bare minimum would be to have third party for the liability amounts.

    If you have hospital coverage through your health insurance, depending on your age and income it can be pretty good for tax minimisation. As with extras this is optional, and would depend on your lifestyle and uptake of the services offered.

    Home and contents insurances is just a way to cover your assets if something happens to them, I dont think the average person could afford to rebuild a home and replace their contents if something happened to them, without insurance.

    The other thing to note is that insurance companies have the resources to undertake legal action against someone who has faulted you, while you were insured.

    I think the main point is that insurance is more than just a payment, and with all things we purchase we can be saavy in the buying decision to only spend what we need.

  • popsiee on 11/03/2021 - 08:21
    +1

    OP has woken up about risk and reward .
    A quick example : You rear end a Lamborghini .
    Person A with a house and no insurance is in big trouble . ( This person should have seriously consider third party insurance like excess 2k at a cheap rate )
    Person B with no assets has nothing the insurance agency can seek . Definitely no insurance is the play for this type . I know people will whinge about community obligations but pure mathematically based :)

  • lord henry on 11/03/2021 - 11:15
    +4

    Self insurance is popular for pet health care - mostly because all of the available insurance options are poor value.
    If you have something like a mortgage offset account, or a reasonable savings account, you will always be able to meet the pet health care costs as they arise, and it may be painful to pay them at the time but you should usually come out on top.

  • Drj55 on 11/03/2021 - 13:43
    +4

    A tree fell on my wife's 6 month old car while she was at work. SGIC paid out $83K for a brand new car. They even upgraded our paint for free. I think that means we're ahead for all car insurance we have ever paid!

    A friend had a melanoma and his income protection paid out $80K for the diagnosis and year's salary while he had chemo therapy.

    As for medical insurance you have to understand that even minor surgeries will cost you thousands and thousands. The public system is always there for emergencies but there are so many "elective" things you might need doing that are not urgent enough to be done on the public system any time soon but make your life a very unpleasant experience while you wait. With the extra medicare surcharge it just doesn't make sense to "self insure" in my opinion.

  • Kingfield on 11/03/2021 - 14:03
    +1

    Honestly, it depends on what your risk tolerance is.

    With Health Insurance, it's honestly not essential as medicare covers anything that you actually NEED. I didn't bother with health insurance until I reached the relevant tax bracket where you get the medicare surcharge.

    In terms of car insurance, depends whether you are a good or bad driver and how likely you are to be in an accident. I didnt buy insurance for any low value cars or motorcycles (i.e. under 5K) since it's simply not worth it, the premiums are high even though the value is low in order for you to cover third parties. However for decent cars (e.g. >$15k, I have, partially to save myself headache if anyone else hits me). Overall I'm pretty sure I'm way less likely to be involved in an accident than the "normal" person, so my insurance premiumse would be me subsidising for other reckless/bad drivers and hence I refuse to buy insurance for cheap vehicles.

  • PhatChedda on 11/03/2021 - 14:20

    One word= barefootinvestor

    • cashless on 11/03/2021 - 15:09
      +1

      that's 2 words. Is it a new Health Insurance provider?

      • MrFrugalSpend on 11/03/2021 - 23:01

        possibly actually 3 words? although, i suppose bare foot is actually a 'closed' compound word "barefoot" - so you are right

    • bargain huntress on 13/03/2021 - 16:08

      does barefoot investor talk about insurance?

      • retardedrabit on 13/03/2021 - 16:29
        +1

        Yes, for people over 31 who earn over 90k:
        * Purchase top-level 'comprehensive' private hospital insurance
        * Don't purchase extras or 'combined' healthcare cover
        * Stay away from iSelect

  • MrFrugalSpend on 11/03/2021 - 22:54
    +4

    Hi all,
    I used to think about cancelling mine to save instead, but then my Health Insurer paid out $300,000 in less than 3 months for our family after our world got turned upside down. Plus tens of thousands more over the next year or two in our choice of follow up specialist appointments etc. It honestly gives me the shivers to even contemplate thinking about where we would be if we didn't have it.

    Enough said?

    • bargain huntress on 13/03/2021 - 14:47

      how do you get your insurance to pay for specialist appointments?

      • MrFrugalSpend on 13/03/2021 - 16:01
        +1

        it was a very serious condition - each monthly follow up was admitted two days / one night back in hospital for extended observations, treatment, tests etc.
        I presume other things were extras as we had top level cover for them too

    • MrFrugalSpend on 13/03/2021 - 16:15

      As another thought - I always hear about people talking about never getting anything back from their health insurance so they need to cancel it…
      Its insurance, for just in case you need it - why is health insurance singled out?… i.e. you rarely hear people say:

      "I've paid out all these premiums and never got anything back from my…
      … Death and Permanent Disability Cover"
      ….Income Protection Insurance"
      ….House and Contents Insurance"
      ….Fire, Theft and Third Party Motor Vehicle Insurance"
      ….Professional Indemnity Insurance;"
      …. so I should cancel it"

      Why do you need to get all these free massages and crap - its not what its for, you're car insurance doesn't give you free car washes?? It just adds to the cost for everyone
      ???

      • bargain huntress on 13/03/2021 - 16:24

        i dont want them to buy me massages

        i want them to pay fully for my medical treatment like surgery if and when i need them

        they dont

        i have to pay enormous gaps on top of the enormous premiums

        id be happy for them to take the massages away if they would just pay all of what they are supposed to be for

        • MrFrugalSpend on 14/03/2021 - 10:22
          +1

          ^^ true this for a lot of things.
          The gaps have long annoyed me. Find me someone that will do the job for the pre-gap payment in my area for most things… you can't. A lot of that is medicare not private health though.

          In car insurance land it is 3 quotes and they pay all of the repair, not $4000 for A, $4500 from B, and $3500 from C… however we schedule this at $2000 so you pay the rest… :-?

          However when we were in the middle of the worst of it, we didn't see a lot of gaps.

          • bargain huntress on 14/03/2021 - 16:56

            @MrFrugalSpend:

            when we were in the middle of the worst of it, we didn't see a lot of gaps.

            well that's something i guess

  • AustriaBargain on 11/03/2021 - 23:54

    The top tier of BUPA cover also gives you massages and such for just a few dollars excess.

  • Laurenlauren on 12/03/2021 - 01:13

    Why not switch insurance companies to take advantage of the 1-month-free offers?

  • mooie on 12/03/2021 - 08:12
    +1

    I only use this DIY Insurance on my camper-trailer.
    I bought it so cheap, that the insurance would be more than the cost of the trailer after a year.

    So I put the same amount of money aside each month, and I use that for repairs, and eventually when I have enough saved, I can upgrade to a better one.

    Not sure how well it would work for things, like health or car insurance…

  • Hangryuman on 12/03/2021 - 08:34

    as a couple without kids I reckon we've paid out like $30,000 in private health insurance - hospital only, I have top hospital in case I need knee surgery, my partner a lower level.

    in the last 20 years, we've got nothing back from that 'insurance' so I rankle at the thought of paying another maybe $3000 this year for both of us.

    we're both retired / lower income so the medicare levy surcharge doesn't apply.

    Frankly, I see no benefit from our experience as a healthy couple, and I was only talked into keeping it last year by an ex-nurse who shouted at me 'you need it!'

    which I saw as a bit self-serving there perhaps.

    • bargain huntress on 13/03/2021 - 14:46

      if you are getting old, are you sure you are going to stay healthy?

  • drprox on 12/03/2021 - 15:43

    How about just not having the "best health insurance you can buy". Get a cheap one.

    • bargain huntress on 13/03/2021 - 14:45

      but then won't they pay even less when i need it? (which is semi regularly)

  • bmerigan on 12/03/2021 - 21:48
    +2

    As far as health insurance goes, hospital and medical procedures and specialists are crazy expensive. A hospital stay is $1000 per day. Surgeon couple of thousand, anaesthetist couple of thousand. You may be healthy, as am I, but you don't know what's around the corner.

    Car insurance… Imagine hitting a Bentley. I doubt you will have saved $400,000 in your insurance fund.

  • kfcfatfat on 12/03/2021 - 21:59

    Insurance is in case you need to use it. Do you prefer having good health or bad health which you need to make regular claims?

    Insurance is a business on banking on the unknown. You can take the risk on not having insurance. But if you suddenly need surgery then you will have to relied on the public system. Like snapping an ACL and needing to wait years to get it fix via public instead of weeks in private.

    The other thing is it depends on you income. If you are on high income you are better off having insurance otherwise you will have to pay the Medicare surcharge. Some time it is just a few hundred bucks more to have insurance compare to the surcharge.

  • dickiee on 12/03/2021 - 22:32
    +2

    Well medibank have covered me nearly 200k over the past 18 months. Which has really helped me get my life back on track. (Mental health issues after losing my kid) so yeah. In my case it's worth it.

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