Does Claiming Push Your Premium Up Next Year?

“I claimed this year. Is my premium going to jump next year?”

A lot of people are quietly not using their policy because of that worry. Health insurance premiums do rise every year, but it has nothing to do with whether you personally claimed. Rates are set on your age, on medical inflation, and on the insurer’s overall claims experience. So when you have something to claim, claim it.

Premiums actually move in three directions, and it is worth knowing which is which.

1. The premiums that always rise

Health insurance, at every insurer, will go up. Three things drive it: your age, the rising cost of medical care, and the insurer’s claims experience over the previous year. (Why the last two years have been particularly brutal.)

Note that middle one carefully. It is the insurer’s overall claims experience — not your personal claims record. A few thousand dollars claimed by you does not get you individually repriced.

Stepped life and trauma cover also rise, because those premiums climb with your age.

2. The premiums that stay flat

When you take out life or trauma cover you can choose a level premium. You pay more than the stepped equivalent while you are young, but you never have to worry about the premium climbing as you age — and as your income grows over the years, that fixed amount gets easier to carry, not harder.

For children’s trauma cover, locking in a level premium before age ten is particularly good value.

3. The premiums that actually fall

This surprises people, but it happens.

Some insurers apply a loyalty discount after you have held the policy for two years: 1% to start, growing by another percentage point each year, up to 10%. Put that on a level life or trauma policy — premium flat, discount growing — and what you pay goes down.

So use the policy

The worry behind all of this is “if I claim this year, will I be punished next year?” For health insurance, no. Insurance is bought to be used. Getting the claims you are entitled to is what makes the premiums you have been paying worth something.

If your premium has gone up and you are wondering what to do about it, the options are in this article — restructuring before cancelling is almost always the better move.

Still have questions about premiums or claims? Get in touch with Cornerstone Insurance.

Phone: +64 211 280 727 Email: amy.tao@cornerstonefs.co.nz WeChat: Amytaoingrace