Navigating private health insurance can feel overwhelming, especially if it’s your first time. With countless policies, confusing tiers, and fine print packed into lengthy documents, it’s easy to make a choice that ends up costing more than it saves. While private health cover is designed to provide financial protection and peace of mind, the wrong policy can leave you underinsured or paying for extras you’ll never use.
To help you sidestep the most common traps, here are six mistakes people often make when comparing private health insurance—and how you can avoid them.
1. Chasing the cheapest policy
It’s natural to want to save money, but the cheapest plan doesn’t always give you the best value. Low-cost policies often exclude major treatments, come with high excess fees, or provide very limited hospital cover. If you need surgery or a lengthy hospital stay, a bare-bones policy could leave you with steep out-of-pocket bills or stuck on long public waiting lists.
Smart move: Look beyond the price tag. Compare how much coverage you’re actually getting for the premium you’ll pay. Sometimes a mid-range plan delivers far better long-term savings than the cheapest option.
2. Ignoring waiting periods
Many people assume that health insurance kicks in immediately, but that’s not the case. Insurers impose waiting periods to prevent people from signing up only when they need expensive procedures. For example, pregnancy and pre-existing conditions usually come with a 12-month waiting period, while other treatments can carry at least two months.
Smart move: If you know you’ll need certain services soon, check the waiting periods before choosing a plan. If you’re switching from another fund, ask if your new insurer will recognise the waiting periods you’ve already served.
3. Paying for extras you won’t use
Extras cover—things like dental, optical, or physiotherapy—can be useful, but not for everyone. If you rarely need these services, you might be paying more in premiums than you’d ever claim back.
Smart move: Do the maths. Compare the yearly premium for extras with what you’d likely spend out of pocket. If you’re not getting close to your annual claim limits, it might be cheaper to pay directly for those occasional appointments.
4. Skimming over the fine print on gap cover
Even if your policy covers a treatment, you may still be left with “gap” fees. This happens when doctors or hospitals charge more than the Medicare Benefits Schedule. Some insurers offer gap-cover arrangements that reduce or remove these extra costs, but not every provider participates.
Smart move: Before undergoing treatment, check whether your hospital and doctor are part of your insurer’s gap-cover program. Confirm all costs upfront so you’re not surprised with large bills later.
5. Forgetting about Lifetime Health Cover loading
If you don’t take out private hospital cover before July 1 following your 31st birthday, you’ll start paying a penalty called Lifetime Health Cover (LHC) loading. For each year you delay, your premiums increase by 2%, up to a maximum of 70%. Once applied, this loading stays on your policy for 10 continuous years.
Smart move: If you’re under 31, consider getting hospital cover sooner rather than later—it could save you thousands over time.
6. Settling for the first policy you see
Insurance isn’t something you should buy once and forget about. Policies change frequently, and sticking with the same provider out of convenience could mean paying more for less coverage. Many people don’t realise they could get better benefits—or lower premiums—by switching.
Smart move: Review your cover regularly and compare options from multiple providers. Using an independent comparison service or speaking to a qualified advisor can help ensure you’re getting the best deal for your needs.
Final Thoughts
Choosing private health insurance doesn’t have to be a minefield, but it does require careful research. Avoid rushing into the cheapest plan, make sure you understand waiting periods and gap cover, and be honest about whether extras are worth it for your lifestyle. By steering clear of these common pitfalls, you’ll be far more likely to find a policy that balances affordability with the right level of protection.
