Optical inclusion: Extras cover the top reason for taking out health insurance, survey finds

Extras cover is the number one drawcard for Australians who take out private health cover, new research from Finder reveals.

Finder surveyed 550 private health insurance customers about their top reasons for taking out a policy and found that the majority (69%) purchased it to make the most of extras cover.

Extras cover typically includes services such as dental, optical, physio and more.

Being able to choose a doctor or hospital (56%) and having the ability to skip lengthy queues or be seen sooner (53%) round out the top three reasons Australians take out health insurance.

Being able to avoid the tax penalty (35%) and the lifetime loading penalty (27%) also ranked high on the list of motivating factors.

Taylor Blackburn, insurance specialist at Finder, said that although health insurance can be expensive, there are multiple benefits to taking out cover.

"Health insurance can provide excellent value if you take out a policy tailored to your needs and you make the most of your inclusions.

"Extras cover is particularly popular because it enables policyholders to claim for non-hospital related services that aren't covered by Medicare.

"For instance, you might need a new pair of prescription glasses, which are not covered by Medicare. With optical cover, your insurer will pay your out-of-pocket costs if you purchase from a registered optical dispenser.

"So instead of paying upwards of $100 for a new pair of frames, you may only need to pay as little as $3 per week for extras cover and be covered for a couple of no-gap dental cleanings as well," Blackburn said.

The research found that baby boomers (76%) are the most likely to take out health insurance primarily for extras cover, followed by gen Z (73%).

Men (61%) are more likely than women (50%) to value choice of doctor or treatment location, whereas women (16%) are twice as likely as men (8%) to cite poor health as one of their top reasons for taking out cover.

Blackburn said that it's important to shop around before committing to a policy to get the most bang for your buck.

"If you're browsing policies online, keep an eye out for deals that can help you save on your premium or reward you for signing up.

"Medibank is currently offering six weeks free and waiving two and six-month waiting periods for customers who take out combined hospital and extras cover by 31 March.

"CUA is offering a $400 egift card and waiving two and six-months waiting periods for new customers who take out combined hospital and extras cover by 30 April, while new Qantas Insurance customers can enjoy up to 140,000 Qantas Points on all top policies until 4 April.

"Remember – don't sign up just for a special offer. Make sure you're purchasing a quality policy that is going to meet your needs," Blackburn said.

Source: Finder survey of 550 health insurance customers, March 2021.
*Respondents required to select their top 3 reasons, so responses may not add up to 100

Ways to get value for money on your policy:

• Pay your premium upfront. This way you can avoid the administration fees associated with monthly payments. Paying via direct debit can also get you a discount with some health funds.
• Mix and match your hospital and extras. You don't have to use the same provider for both policies. Two different funds may have the best offers for each, so you can choose to purchase hospital cover from one fund and extras cover from another.
• Check your agreements. Make sure your preferred doctor and hospital both have agreements with your health fund before signing up to a policy. This way you can avoid paying a gap.