For purpose low risk safe investment

Xtras health plan is a dedicated for purpose account for extras health needs with added features such as paying hospital gap, GP visits and your pharmaceuticals. The funds you set aside for your health is held in low risk investments that are at call giving you the comfort of knowing your funds are not being risked chasing a higher return that could be locked in for a period of time, which if broken diminishes the returns.  Think of it as one putting money away in small amounts overtime building a nest egg for your health needs. Note of caution, here it is not a replacement for your hospital cover. Funds in the account earn interest as well. Over time the balance in your Xtras health account should gradually increase, depending on how you spend the funds in your account. ASIC’s money smart has a lot of useful tips on how to save and set money aside for an unexpected event. Tips include setting aside money on a regular basis and not dipping into it, controlling impulsive buying and earning income on the investment. The dedicated nature of the account with XHP ticks all these boxes.

Evidence of having a structure in place to enable savings for a purpose has been around for years. The most notable one being Superannuation. Small amounts of money are regularly contributed and invested which accumulates and is made available to you in retirement. Sport is another example where even the most elite athletes have a structure, for example take Roger Federer, the man can play tennis in his sleep, but have you seen his box at the Australian Open, there are coaches, physiotherapists, nutritionists and an ensemble of people who maintain Roger in peak condition. The structure enables Roger to play at his best. It is often small things that is the difference that makes the difference, the sharp eyes of the coach who fine tunes strokes or shots that enables Roger to be the best at his age.

That said, if you have the discipline you can do it yourself. If you are one of those people, our guess is you are already doing it and you are successful at it. Perhaps you are reading this as you may have come to the realisation that having a dedicated account is better to get rid of temptations and impulsive spending.

Setting aside impulsive spending for a moment at present most people are faced with flat wages and rising cost of living, which has made saving money harder for several Australians and they are dipping into their savings eroding the nest egg. For some this could mean that having funds for an emergency is beyond their means driving them further and further into debt. Australian Bureau of Statistics revealed the average amount of household debt has doubled in 12 years — from $94,100 in 2002-04 to $168,600 in 2015-16 which includes home loan debt.

62% of responds in a survey1, conducted about the value of private health insurance, think that “Health insurance isn’t worth the money you pay for it “. This survey is not specific about extras health insurance. However, data from APRA2 figures show that in 2017 health insurers raised $6.47 billion in general treatment premiums for "extras" and only paid out $4.87 billion, creating an excess of $1.6 billion. Begs the question what if this amount was in your XHP Health Savings Scheme, the next financial year would start with a balance of $1.6 Billion (assuming contributions fees are taken off) instead of $0 to start with.

Here is where XHP comes into its own. Unlike the traditional private health insurance extras cover, all of your unused funds accumulate for you year on year of your membership. Over time this has the potential to create a nest egg. This also has the potential to save you money overtime, as you are not wasting your unused funds away. This could come in handy to get you over your debts and start accumulating fund towards other projects such as setting aside money for a home deposit or going for a holiday.

  1. http://www.essentialvision.com.au/health-insurance-2
  2. https://www.apra.gov.au/sites/default/files/.../copy_of_phi_operations_2017.xlsx