What is Lifetime loading in health insurance

Lifetime Health Cover (LHC) is designed to encourage people to take out hospital insurance earlier in life when they are less prone to more serious illnesses. Under LHC health funds are required to apply a loading on the base premium of a Private Health insurance hospital policy.

The loading is determined on the ages of the adult members of the policy when they purchase hospital cover, with a loading of 2% applied to the base premium for every year over 30 that the policy holder is before they took our private health insurance.

The Private Health Insurance Act 2007 now includes a new provision requiring health insurers to cease applying the loading to the basic premium after ten years continuous hospital cover. In addition effective 1st July 2013, the Private Health Insurance Act 2007 also now includes a new provision requiring health insurers to cease applying the Australian Government Private Health Insurance Rebate to the Lifetime Health Cover loading component of the premium.

For example someone who first takes out cover at 40 will pay an additional 20 per cent (40yrs-30yrs = 10yrs x 2% = 20%) on top of the base premium for the next 10 years. Once they’ve had continuous private hospital cover for 10 years, the loading will be removed from their premium. There are also exemptions if you’ve been out of the country or you have migrated.So it’s a bit confusing really, but the good news is that all of ItsMy’s advisers have a minimum of 5 years experience in private health insurance and deal with this legislation dally and will be able to explain to you what this all means and importantly see if they can save you money

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