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5 Dangers of Letting your
Private Medical Insurance Lapse
and 2 Solutions

“Dear Client,
Your next Private Medical Insurance premium is due on XX/YY.”

Life happens –  personal financial situations change, which can affect your cash flow and ability to make monthly payments, but remaining on top of your next installment payment or annual renewal for your health insurance is very important. So, what do you do when life happens?

First and foremost, there can be huge consequences if you allow your private medical insurance policy to lapse.  Consider these 5 dangers before asking yourself “do I need to keep paying for private health insurance?”

 5 Dangers of Letting your Private Medical Insurance Lapse 

If you don’t make your payment on time (including a typical grace period), your private health insurance policy will lapse, your coverage will end and you are therefore financially liable for any unexpected medical bills. That may not be an issue if it’s a minor claim, but can be catastrophic if it’s a serious accident, injury or diagnosis. 

Besides considerable medical bills, here are the 5 dangers of letting your policy lapse:

1. You’re treated like a brand new member

If you return to your previous insurance company, they’ll treat you like a brand new member. They will not care that you were previously insured with them, and even if you didn’t claim with them, you’re starting over from day one.

2. Every tiny claim will be treated as a pre-existing condition

Your old provider will know every minor claim and treat it as a pre-existing condition. Every little bump, bruise, and sniffle will be re-underwritten and subject to acceptance.  

3. Fairly serious pre-existing conditions are nearly impossible to get covered by new providers

If you’ve put through a major claim for something serious, it’s significantly harder to be accepted by a new provider or even re-accepted by your previous provider. Keep in mind, the insurers’ job is to make money; they’ll avoid the liability of covering major conditions that were previously insured under your old policy.

 

4. A fresh start with a new provider

A common solution is to find a new provider that offers a cheaper alternative. 

When this happens, you’ll need to build up a good history again. Satisfactory history with providers is obtained by being continuously insured for a period of time, where you’re either not claiming or have very simple claims for minor issues. The reality is that the longer you have no claims, the better off you are.

To find coverage for major diagnosis, you need time with the new insurer to prove that it’s not related to a pre-existing condition.  For example, if you’re diagnosed with Gout two months after your policy begins, the claim will likely be denied. Gout doesn’t just occur – it’s a build up of uric acid over a period of time. While acute Gout symptoms may have presented itself after your start date, the root cause of the problem existed before the policy started and therefore will likely be considered as pre-existing conditions that aren’t covered.

5. Higher chance of denied claims

If you change providers, claims that were covered with your previous provider can now be excluded by your new provider.  This isn’t as relevant for acute minor injuries or illnesses, but can have major implications for significant diagnoses or chronic conditions – the complications that cost the most and require private medical insurance.

Ask a question. Get a quote. Talk, chat, email – your choice.

2 Solutions if you’re in a Financial Bind

 1. Renew with your current provider

This is your best option as you’re already underwritten, regardless of if claims have been filed or not.

  •   Have claims?

Great! The insurer has already proven it will pay out for whatever claim you’ve placed.

  • Don’t have claims?

The longer you’re continuously insured with the same provider the less likely it is for any claims to be denied. You don’t want to throw away 1, 2, 3+ years worth of strong claims history. 

If you simply cannot afford your current plan exactly how it is, there are options to consider:

    • Remove unnecessary benefits.  For example, focus on inpatient only to cover high-ticket medical treatments
    • Reduce your coverage area, as most modern insurers will cover temporary trips outside of your main coverage area 
    • Add a deductible or increase your deductible
    • Pay with installments
    • Pay with a credit card

Keep in mind that you can only adjust your plan at the annual renewal date, not during the policy year or when you pay your next installment. 

 2. Change Providers – downgrade to something more affordable

With this option, you still expose yourself to the risk of being newly underwritten and denied coverage, but having some insurance is safer than having no insurance. If your current provider is no longer tenable, then your Tenzing Pacific Services advisor can help you find a more cost effective provider and plan. 

When downgrading plans, you’ll likely need to make one or multiple concessions. These compromises can include losing a benefit or key feature, doesn’t offer as safe of terms and conditions, or simply taking a provider that isn’t as user friendly.

🎯 Conclusion

If possible, look to renew with your current provider with one of our cost-cutting measures. Private medical insurance is all about covering future unknowns, and neither accidents, injuries, nor diagnosis will wait for you to be insured. 

Ask a question. Get a quote. Talk, chat, email – your choice

Our goal is to provide you with the information you need to make informed decisions. Whether you’re exploring insurance or investments, these articles are designed to help. If you still have questions or are ready to take the next step, our team is here to assist you.

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