If you're using a site to compare different insurance options, you'd want the broadest range of possible options — but that doesn't mean that comparison sites actually aim to include every single deal on the market. Here's why (and why people still often use the phone when choosing a health insurer).
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Obviously, one reason is that some insurance providers choose not to work with comparison sites in the first place. However, according to David Rees, managing director for insurance comparison site Choosi, offering too many options makes it harder for consumers to actually get the right fit.
"If you give people too much choice, then they get 'analysis paralysis' and they can't choose," he told Lifehacker. "There's something like 40 health funds out there, for instance. If you had them all on the books, it would hurt you in getting that decision made. We're always looking for that happy balance and we've got a good choice of funds."
"It's a very complicated purchase There's a lot of elements and a lot of different ways to present it. Funds can use different names for the same product as well."
Fund willingness to be listed is also a factor, though Rees said there was a broad recognition that being on comparison sites now needed to be part of the marketing strategy. "All funds recognise that comparison sites are firmly on the map. Some have dived in and see it as key; other funds dip in and out."
Rees said demand for health insurance rose rapidly in the run-up to the end of the financial year, especially because of new rules where people had to nominate an appropriate income tier for their fund to calculate what level of tax rebate they would receive.. "From an industry perspective, year-on year there's been a huge spike and it would be 100% on the back of the new tier system. It's has generated a lot of inquiries."
Broadly speaking, if you earn more than $84,000 a year as an individual, then taking up health insurance is cheaper than paying the higher Medicare levy you'll face otherwise. "For us, it was a challenge to take that change and work out how to present it to the consumer," Rees said. "Across the funds everyone has taken a simple approach. The majority of people aren't going to be massively affected because of the thresholds."
While you can compare funds in detail on sites such as Choosi, Rees said most customers still ended up phoning the site before making a decision. "The majority of people still need to talk to someone We have spent a lot of time and effort on the site and trying to tackle the complex presentation, but the majority of people still find that a bit overwhelming. That underlines that it is a confusing purchase and there's more work to be done."
So should you automatically go for the cheapest option? "Price is one thing, but it's the benefits you are getting that are crucial. If you're a frequent claimer, then annual limits are what you need to focus on. For your every-now-and-again claimer, big benefits are important. People have to understand how they're going to use the product. It makes a big difference, You can have identically priced premiums but those details are needed."
Rees also advises against simply working out what your tax liability would be without insurance and spending a similar amount. "The temptation is to supplement your health insurance with a similar value percentage. Substituting health insurance for tax is a great thing to do, but you shouldn't just go for a like-for-like swap. Find a product that's going to work for you."
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