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Four smart ways to save on health insurance

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April Fools' Day is fast approaching and for those with health insurance it means that a change in premiums is about to take effect.

We don't yet know what that change will be; in 2014 and 2015 the industry-average premium (what we pay month-to-month or year-to-year) increased by 6.20% and 6.18% respectively. This was against year-on-year general inflation of 2.9% and 1.3%.

What we can be assured of though is that health insurance premiums will rise. According to inflation figures released by the Australian Bureau of Statistics, health costs have risen by 5.3% in the past year.

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When you do receive your premium change letter or if you are now just looking for a health insurance policy, there are some easy ways for you to save money and still have the protection you need. Here are four smart ways to do it:

1. Think about the level of health insurance cover you need

While some consumers prefer to have the highest possible level of cover in the knowledge that they will be protected against as many eventualities as possible, this level of cover doesn't come cheap. You may therefore wish to obtain cover that suits your needs right now, as well as keeping an eye to the future.

Most insurers offer a range of products from a low to high level of cover and in recent years more policies have been developed to match the likely medical needs at different life stages.

You could make some considerable savings by reviewing whether your current policy is right for you; as an example, CANSTAR's research has found that the premiums on family hospital and extras cover in New South Wales range from $98 to $604 per month.

2. Shop around

There are 35 health funds in the market vying for your business. That means that there is choice and when there is choice there is competition.

Take some time to do your research and see what is available. Unlike other insurances, health funds have limited options when it comes to negotiating on premiums with the maximum premium discount they can offer being only one month.

They will however offer other incentives such as discounted gym memberships, running shoes or even a bike.

Don't let the incentive be the main reason for change, of course, but provided the policy matches your needs then any discounts or incentives are an added bonus.

And if you do decide to switch you will have comfort in that any waiting periods served under your previous policy will carry across. This means that you may possibly be able to claim from the day you purchase your policy.

3. Get some easy wins with some simple choices

For example, by increasing your excess (your out-of-pocket upfront cost in the event that you are admitted into hospital) you can decrease your premium, which means more money in your pocket now.

How much could you save?

On one policy on CANSTAR's database, increasing the excess from $250 to $500 would save you $30 a month. You would have to pay more if you were admitted, of course, but the ongoing savings are material.

4. You can beat the April 1st premium increase if you pay your health insurance premiums for a year in advance

Provided you have the cash easily on hand (and won't be running up a credit card debt) this is one way to stay a year ahead of the increase and save some money.

It is now over to you to achieve those savings - make sure your cover is right, shop around, get some easy wins and think about paying in advance.

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Mitchell Watson is research manager with Canstar.
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