Frequent flyer health insurance

In Australia’s highly competitive health insurance market, insurers regularly offer a range of promotions and special offers to entice new customers. One initiative health funds use to sweeten the deal is to offer frequent flyer miles or loyalty program reward points to their members.

While these points offers can be a great added bonus for health insurance consumers, they should never be the only factor you consider when choosing a health fund.

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What types of points are on offer?

There are two types of points on offer to Australian health insurance customers:

• Frequent flyer points. You can earn frequent flyer points to help you save money on domestic and international airfares. These points are offered through programs such as Qantas Frequent Flyer and Velocity Frequent Flyer.
• flybuys points. Some health funds allow you to earn points as part of Wesfarmers' flybuys rewards program, which is Australia's largest loyalty program.

How can you earn frequent flyer points with health insurance?

There are typically two ways you can earn points on health insurance in Australia:

• Sign-up bonuses. In an effort to entice new customers, many funds offer sign-up bonus points to new members. For example, at the time of writing, new couples, families and single parents who signed up for combined hospital and extras cover with AHM could earn up to 55,000 flybuys bonus points.
• Paying your premiums with your credit card. If your credit card allows you to earn frequent flyer or other reward points on purchases, you can boost your points balance by using your card to pay for your health insurance premiums. For example, you may earn one frequent flyer point for every dollar you spend on your card.

You can redeem the points you earn for a range of rewards. If you earn frequent flyer points, you can use your rewards balance to purchase flights, accommodation, food, wine and a range of other products. You can use your flybuys points to purchase flights, gift cards, frequent flyer points and a range of goods and services as well as save money on your grocery shopping.

Pros and cons of choosing a fund based on points offers

Pros

• Earn frequent flyer points. You can earn frequent flyer points to help pay for your next holiday.
• Earn other reward points. You can also earn points in loyalty programs that offer a variety of other rewards. For example, you could get rewards such as shopping discounts, gift cards, travel, entertainment and much more through the flybuys program.
• You’re still covered. You would still purchase health insurance regardless of whether there was a points offer available, but these offers allow you to enjoy the peace of mind of health insurance cover and earn a reward at the same time.

Cons

• Not necessarily the best cover. Just because a health fund offers reward points does not mean it offers the highest level of cover.
• Not necessarily right for you. Just because you can earn reward points for purchasing cover does not mean that a particular policy provides all the benefits and cover you and your family need.
• Credit card interest rates. If paying your health insurance premiums with your credit card to earn frequent flyer points, remember that unless you pay your balance before the interest-free period ends, you’ll accrue interest charges on your card.

Pros and cons of paying your health insurance premiums with your credit card

Pros

• Be rewarded. Paying for your health insurance premiums with your credit card allows you to increase your reward points and enjoy cheaper flights as well as a range of other discounts.
• Get covered. You still get to enjoy the peace of mind that comes with having the right type and level of insurance cover in place.
• It's convenient. It's simple and convenient to pay premiums via your credit card, and you can also save extra time by setting up a direct debit arrangement.
• Discounts. Many health funds offer discounted cover if you pay your premiums via direct debit from your credit card.

Cons

• Not repaying your balance in full. If you fail to repay your credit card balance in full each month, you will need to pay interest on the outstanding balance on your card.
• Forgetting about direct debits. If you set up a direct debit from your credit card to pay your premiums, you may forget about this payment arrangement when you switch health funds.

• Changing credit cards. If you have a direct debit set up and your card expires or you choose to cancel it for some reason, you may not pay your premium in time and your cover could lapse.
• Cash advance rate may apply. Some credit card providers treat health insurance premiums as a cash advance rather than a purchase, which means that a higher interest rate applies to the transaction and you will not be able to take advantage of any interest-free days.

So while health insurance points offers can be a great way for you to enjoy some extra rewards and value for money, it’s vital that you don’t choose a health fund based solely on the fact that it offers points. Make sure to compare your options and choose the insurer that offers the right cover for your needs.