Private health insurance and lock-in premiums

Chris Stanley

Chris Stanley

Updated 14/04/2022

Your complete guide to locking in your health insurance premiums, including why it’s worth doing, how to do it, and how it could save you money on your insurance.

Private health insurance and lock-in premiums

Private Health Insurance And Lock-in Premiums

So, you’ve heard that lock-in premiums can be a great way to save money on your health insurance, but you can’t quite figure out precisely what lock-in premiums are or even how they work.

Sound familiar?

If so, the following guide is for you.

We’ve answered all of your questions about health insurance premiums and locking them in, so you can take advantage of lower health cover prices today.

Key Points

  • Health insurance providers increase the price of their premiums each year, usually around April 1st.

  • Locking in your premium at its current rate can help you to avoid that increased rate.

  • To do this, you pay your next year’s worth of coverage upfront at the current pre-increase rate.

  • Carefully comparing prices can help you find a cover that comes with the most affordable monthly premium for you and your family.


Why should I get private health insurance?

Opting for private health insurance can help you avoid lengthy waiting lists for non-emergency surgeries in public hospitals.

Just as importantly, it can help you to avoid being struck with Lifetime Health Cover loading and even avoid the Medicare Levy Surcharge where that's applicable.

Our guide to the benefits of private health insurance explains all this in more detail. 

What is a health insurance premium?

Simply put, a health insurance premium is a price you pay to cover the cost of your health insurance.

Each year, Australian health insurers increase the price of these premiums to cover the increasing cost of healthcare in the country.

Who pays health insurance premiums?

Many Australians pay for their premiums themselves. 

Some have a job that provides healthcare benefits, which means their employers pay a large percentage of their monthly premium, leaving a smaller amount to be paid by the employee.

How are health insurance premiums paid?

Health insurance premiums are usually paid once a month, quarter, half year or year, although individuals who receive health insurance through their employer may pay with deductions from their wage or salary.


How are premiums calculated for health insurance?

Health insurers set their premiums for the various levels of cover they offer.  As a general rule, the higher the level of protection a cover offers, the higher the premium..

After that, the actual amount you pay is dependent on multiple factors, including whether or not you have a Lifetime Health Cover loading, the private health insurer and, of course, the type of health insurance policy you decide to take out.

With that in mind, it's always worth taking the time to carefully compare offers from private health insurers to find one that offers the coverage you and your family need at a price you can afford. You can also contact the Private Health Insurance Ombudsman for general information about private health insurance policies.

Has the rate change been affected by COVID-19?

Initially, the impact of COVID-19 caused most health insurers to delay their usual annual rate increase by six months in 2020 while offering assistance to customers who have struggled financially due to the pandemic.

In 2021, health premiums went up on April 1, which is the norm, but meant that customers were hit with two rate rises in six months.

In 2022, many health insurers have decided to either raise their premiums later in the year or increase them in April, with some funds delaying their increase until September, October and even November.

Is health insurance paid monthly or yearly?

Health insurance is typically paid monthly.

However, if you want to lock in the same price for your health cover, some health insurers let you pay upfront on an annual basis, with nib allowing you to pay 13 months in advance.

What is a lock-in premium?

When health insurers increase  their premiums, they first give you the opportunity to pay for your next 12 months' cover upfront at your current rate.

This means that you won't have to pay the increased premium rate for up to a year and is known as a lock-in premium.

How do I lock in a premium?

In order to lock in a premium, you simply need to pay the full 12 months before your insurer's price increase comes into effect. 

If your premium increases, your health insurer must notify you before increasing it.


When is the best time to lock in my premium?

The rate rise usually starts on April 1st each year, so you'll need to ensure that your bank has processed the payment for your cover before then. 

Some banks can take up to six days to process a payment, and some insurers even have a cut-off date for accepting premium lock-ins, so you’ll need to do it sooner rather than later.

Ideally, locking in your premium in early to mid-March ensures there’s plenty of time for your payment to go through.

What are the benefits of locking in my premium?

The most significant benefit of locking in your premium is that you save money. 

Let's say you're currently paying $50 per month for insurance, and your insurer ups their monthly premium to $56.

If you lock in your premium at your current rate, you will pay $600 for the whole year, whereas if you left it and paid the increased premium, you'd pay $672, meaning a significant annual saving.

The other benefit is that by paying everything upfront, you're left with one less bill to worry about for the rest of the year.

Will health insurance save you money in the long run?

Health insurance can help you to save money in the long run, as choosing the right policy can often minimise -or eliminate- your out-of-pocket expenses for surgeries or other forms of health services and treatment. 

Australians who purchase private health insurance may also be entitled to a private health insurance rebate. A private health insurance rebate may refund part of what you pay in health insurance premiums.

How does the type and level of coverage impact your premiums?

In Australia, insurers offer four tiers of coverage:

Basic, Bronze, Silver, and Gold. 

Basic cover typically comes with the lowest monthly premiums but leaves you with more out-of-pocket expenses. At the opposite end of the spectrum, Gold coverage may come with higher premiums but provides better financial protection should the worst happen and you need hospital treatment. 

Got questions about private health cover? Our experts are able to help.


This guide is opinion only and should not be taken as medical or financial advice. Check with a financial professional before making any decisions.

Chris Stanley is the sales & operations manager of health insurance at Compare Club. With extensive experience and expertise, Chris is a trusted leader known for his deep understanding of health insurance markets, policies, and coverage options. As the sales & operations manager of health insurance, Chris leads a team of dedicated professionals committed to helping individuals and families make informed decisions about their health insurance needs.

author image

Chris Stanley

Sales & Operations Manager for Health Insurance