Insurance. It’s a term that many of us know. We may have a number of policies: home, contents, car, even life. However, with the cost-of-living crisis running rampant, more and more people are offloading their policies to try and counter the surging prices draining their bank accounts. With food, basic necessities, and utilities not immune to the great wallet sucker of a time we live in, sadly, other aspects of our lives are bearing the brunt in a bid to save more money so that we can afford to live.
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One such group reluctantly withdrawing from insurance safeguarding is the aging population. In a survey conducted by National Seniors Australia, some respondents outlined that their insurance policies had skyrocketed since inflation took hold in 2022/23.
Another finding in the survey revealed that some seniors were reducing the value of their insurance policies to decrease the cost. Some have even terminated their policies altogether. So, during times of financial hardship, what can we do to ensure we’re not removing the safeguards we need?
”One of the respondents commented: “We travel a lot less than previously and don't attend the theatre or shows anymore. I cancelled my gym membership and health insurance.”
Cost of Insurance Premiums & What This Means for You
Before getting into this topic, let’s explore what an insurance premium actually means. An insurance premium is a payment you make to your insurer to receive coverage (such as health coverage, home and contents coverage, etc.). This is essentially the price you pay your insurance provider for protection. An example of this would be if your home was damaged, the insurance premium you pay each month would mean you’d receive a payout from your insurance provider to cover the cost of the damages.
However, insurance premiums are becoming rather costly. An article by the Australian Financial Review found that in 2025, over 15 million Australians will have to deal with the highest annual rise in health insurance premiums in the last seven years. But why is this the case? What typically impacts the price of premiums is attributed to various factors…
- Firstly, an anticipated cost of a claim can make your premium more expensive if your home, for example, is deemed a high risk. Especially if you live in a region that is often hit by flooding or bushfires. Ultimately, this makes you riskier to an insurance provider.
- Secondly, inflation (yes, those dreaded words) can increase the price of insurance premiums. UNSW explains that during times of high inflation, providers must factor in the associated costs of, for example, rebuilding your home and determining the price of materials. As a result, these necessities are more expensive, and sadly, the provider won’t foot the extra dollars here; the price will be passed down to you.
What Higher Premiums During The Cost-Of-Living Crisis Means For Our Most Vulnerable People
Many people are affected by the rise in insurance premiums: seniors, people with disabilities, young people, marginalised groups—even the general population. Figures from the ASFA found that retirees will need to increase their funding by 3.7% to live comfortably in this day and age.
Aussie seniors typically require more health care than other groups. The ABS says approximately 52.3% of seniors have a disability, with 86.6% diagnosed with a long-term health condition. Statistics also show that many people aged 50+ access private health care. As such, the hike in premiums will place a significant financial strain on our senior population.
For people with a disability – of all ages – they are experiencing major issues accessing and affording private health care. A research paper outlines that “people with disabilities are more likely to experience poverty, and so have reduced capacity to pay [for health care].” Currently, in Australia, around 4 in 10 Aussies with a disability live under the poverty line.
Young people are also feeling the pinch. Younger Aussies are ditching their insurance policies in droves as wages fail to align with the rise in cost of living. Another reason behind the mass exodus is due to the inflated price of insurance premiums (echoing what this article has covered extensively). As a result, younger Australians are struggling to make ends meet, meaning considered “luxuries” such as private health insurance have been displaced in favour of food, rent, mortgages and other necessities.
How To Balance Cost of Living While Preserve Essential Insurances
The question on most people’s lips is: “How do I keep my insurance during a time of economic turbulence.” Unfortunately, there’s no clear-cut answer. However, there are ways you can save money and still keep your insurance…
- Reduce insurance premiums: While this is easier said than done, your insurance is an essential safety net should something happen. Therefore, there are ways you can attempt to reduce your insurance premiums. There is a list of influences that determine your risk factors: age, tobacco and alcohol use, occupation, family history, and so on. Some of these areas are uncontrollable, but if you abstain or reduce your alcohol and tobacco consumption, keep up a healthy lifestyle, and take up low-risk hobbies, you may see your insurance premiums decrease.
- Consult a financial planner: A financial planner can help you develop a financial strategy. A financial planner can dive deeply into your policies and identify areas where you may not need coverage. Additionally, they can help you optimise your coverage by identifying the most suitable policy for you so you’re covered for everything you need – and for any eventuality.
- Shop around: There are many insurance providers across all areas of the spectrum. Websites like Compare the Market, iSelect, and more offer comparisons on insurance providers. They also offer a quote based on the information provided, showcasing where you could save or if your policy is at a market rate based on your background. Research is always key, so be sure to shop around!
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If we’re your workplace wellbeing provider, you can access our Financial Coaching services. Our expert team can support you with saving strategies and identify ways to optimise your financial wellbeing. Head to our website to book an appointment, or download our Converge App to get started. We’re here to support you anytime, anywhere!
