FANews
FANews
RELATED CATEGORIES

Millennials buying into hospital plans

02 November 2015 Andrew Edwards, Liberty Medical Scheme

Escalating living costs, reduced spending power and increases in medical scheme costs are the main contributing factors for the growth and popularity of hospital plans. Cheaper than comprehensive medical cover, hospital plans are an attractive option for the younger millennial market, who are not only interested in cost saving, but also in the inherent value of the products they are purchasing.

Millennials are a key growth market for hospital plans. They are healthy enough not to worry about full medical cover, however, they realise the importance of having cover should they need it in case of serious medical emergencies.

If Millennials did not run to insurers, the insurers would be left with more ailing patients. More youthful individuals convey fewer hazards to protection pools; they have a tendency to be more advantageous.

The millennial generation have access to readily available online information, they are diligent about researching products and companies and are vocally empowered through social media and other related channels to demand the best value for money.

Seemingly attractive options

As purse strings continue to tighten, medical cover, together with car insurance and other compulsory expenses will have an impact on spending power. Cheaper alternatives, such as hospital cash plans are seemingly attractive, however the millennial market is pretty savvy. They have the internet at their fingertips and they will not only look for cheaper options, but for plans that give them the most value for money.

Hospital plans, which are more expensive, offer a lot more long-term value than hospital cash plans, which are an appealing option for millennials. Hospital cash plans can be bought from as little as R86 per month. Typically offered under the Short Term Insurance Act (not the Medical Schemes Act), these products usually pay out a flat hospital rate, which range from between around R2 500 to R5 000 a day.

This may sound like a lot, but in reality, it is unlikely to come close to covering the costs of doctors, specialists and medical procedures such as surgery while in hospital.

According to Liberty Medical Scheme research, an average hospital bill is around R150 000, depending on the condition that the patient has. The average length of stay in hospital is three days. Most hospital cash plans only pay out from day three of being in hospital.

In contrast, a medical scheme hospital plan will cost around R839 per month, but the pay-out is directly related to the actual cost of treatment and not just the length of stay in hospital. So no matter how long or how severe the condition, there is a better chance of having sufficient cover through a medical scheme.

Best behaved generation

There is a popular belief that millennials tend to be “better behaved”, at least when it comes to health. Reinforcing their reputation as the best-behaved generation in decades, they are more likely to exercise and make healthy decisions to manage their anxiety and stress.

Fully comprehensive medical scheme plans, over and above the high cost, are not an attractive option for young individuals, who for all intents and purposes, are at their optimal health. Hospital plans are a far more attractive option, they provide the safety net that millennials are looking for and it covers their needs.

The final say

Young people will try and get the best deal possible because they need the best deal possible. It is a generation faced with significant debt ranging from student debt, car loans and monthly rental costs – this is all coupled with high inflation rates and a tough economic climate.

Millennials will look for the best, most comprehensive, value for money deal and they will make their grievances heard if they cannot find it. Their attitudes should shape organisations thinking of the future.

Quick Polls

QUESTION

How confident are you that insurers treat policyholders fairly, according to the Treating Customers Fairly (TCF) principles?

ANSWER

Very confident, insurers prioritise fair treatment
Somewhat confident, but improvements are needed
Not confident, there are significant issues with fair treatment
fanews magazine
FAnews June 2024 Get the latest issue of FAnews

This month's headlines

Understanding prescription in claims for professional negligence
Climate change… the single biggest risk facing insurers
Insuring the unpredictable: 2024 global election risks
Financial advice crucial as clients’ Life policy premiums rise sharply
Guiding clients through the Two-Pot Retirement System
There is diversification, and true diversification – choose wisely
Decoding the shift in investment patterns
Subscribe now