I was cynical about health insurance until just now



My doctor performed a few biopsies last week. Actually, he probably took dozens. But let’s focus on me for a second. On me, he gouged two.

Literally, as I write this column, I’m hesitantly awaiting a phone call.

He said there was a “one in thirty” chance of it being serious. “But doc, I’ve got two. Does that make it two in 30?” I asked.

“No,” was his reflex response. Then came: “Aah, gee, honestly, I can’t argue with that maths. How do you feel about potential bad news delivered by phone?”

I’ve got my fair share of moles, so I’m talking possible melanoma. There’s about a 7 per cent chance that of those two unsightly holes he “scalloped” into my chest and back, one is the tip of a cancer iceberg. But today is not a lecture about getting your moles checked (take that as a given).

For now, I’m in limbo.

Which brings me to health insurance. I’ve long been cynical about the cost of my health cover. My wife has always insisted on the top level. I’ve barely used it in the last decade. She, DebtBoy and DebtGirl have used it a little.

But I’m tipping that if the doctor’s news is bad – which will probably do more than just ruin my day – I’m going to be glad that I’ve got what feels like the most expensive health insurance on the planet.

Every single day, we are faced with countless financial choices about quality versus price.

Less often, we make big financial decisions. New car or second hand? Private school or public? Big overseas holiday, or save a wad in a cozy caravan by the beach?

And then there’s insurance. Insurance, like most matters financial, is a choice.

When it comes to insuring our cars, homes, contents, lives, health … you’ve got some huge choices between getting basic, cheap, cover and getting cover that will make sure everything is looked when disaster strikes.

And disaster can strike. Your car/s can be stolen or torched (or both – see Your Money editor Neale Prior’s personal story today). Your home can be burgled, or destroyed by fire or bushfire. Your previously good health can turn pear-shaped (fingers crossed here). Your once-in-a-lifetime family overseas holiday can turn into a “National Lampoon’s Vacation” travel nightmare.

Speaking of which … from personal experience, keep your bags locked in Guatemala, no matter how comfortable you get with the locals. That cost me a bucket.

When it comes to insurance, you inevitably get what you pay for. Sure, that’s pretty much the same with everything you purchase in life. But with insurance, it’s even more so the case.

When you take out insurance, understand that cheap policies are generally cheap for a reason.

For instance, with car insurance, one of the biggies is “market” value, versus “agreed” value. Buy a market value policy and you’ll get a cheaper policy, for sure. Your car might be worth $30,000. But when it’s written off in an accident, storm, fire, etc, understand that if the market value for your hunk’o’junk was $20,000, then that’s all you’ll get from the insurer.

Pay a little extra for “agreed” value insurance and you’ll get $30,000 for your car, if that’s what was on your policy.

Home contents – “new for old” versus “residual” value. If you have a TV under “new for old”, they will replace the TV with an equivalent, modern day version. Under “residual” value, if you think your four-year-old TV is worth more than $100, you’re dreamin’.

Health insurance has more bells and whistles than the shift from a basic Ford Falcon to a top-of-the-line BMW 7 series.

Pick a body part and you can pretty much opt whether or not you want that covered in the event you get dealt a faulty part. Teeth, orthodontics, backs, feet, noggins, reproduction, ticker, kidneys, diabetes, dodgy hips, eyes …

And that’s without the different types of professionals you can have covered. There’s oodles of optional extras.

My point? Cheap insurance is one thing. But when it comes to claim time, cheap insurance can be just plain nasty.

Insurance is coverage when your luck runs out. Let’s leave the last word to Dirty Harry and his .44 Magnum. “Do I feel lucky? Well, do ya, punk?”

Bruce Brammall is the author of Debt Man Walking (www.debtman.com.au), a licensed financial adviser and mortgage broker. bruce@debtman.com.au.