Australians who move overseas have found a sneaky way to avoid the cost of health insurance but they’re at risk of having it backfire in a big way, an insurance expert has warned.
A hack circulating on Facebook expat groups and other online forums suggests Australians use travel insurance from an Australian provider in their new country, instead of swapping to a local health insurer.
The problem is most travel insurance policies from Australian providers require the policyholder to be living in Australia when it’s purchased, and living overseas renders the policy invalid.
Some expats appear to be trying to get around the system by using fake residential addresses or masking IP addresses to keep up the illusion they’re in Australia in a bid to save money.
But if they need to make a legitimate claim, they might find their insurer is unwilling to pay up,
Aussie expat Sandy Traum, who now lives in Bali, said she knew people who had tried to use travel insurance to make a claim.
“I had a friend try to claim for a bad case of gastro,” Ms Traum told news.com.au.
“She tried to claim it back on a policy that she’d claimed on a few times before, but the insurer figured it out and denied the claim. That was only a few hundred dollars, so it could have been much worse if it was for something more serious.”
Ms Traum said friends had recommended she just use travel insurance when she moved to Bali, but after inquiring with an insurer, she realised she wouldn’t be covered.
“I ended up deciding it wasn’t worth the risk and got international health cover. It’s more expensive, but at least I know I’ll be covered,” she said.
“I get why everyone is doing it. Proper health cover can cost almost two grand a year, whereas travel insurance can be less than a third of that.
“While a lot of people in the expat groups encourage others to cover themselves properly, you regularly see people recommending Australian travel insurance brands and even boasting that they’ve successfully claimed a bunch of times.
“You hear people suggesting how to cheat the system by using the addresses of family or friends back home, IP maskers, the whole lot.”
Natalie Ball, the director of Comparetravelinsurance.com.au, said anecdotal reports suggested Bali was among the most common destinations for the behaviour.
But not all Australians living overseas were deliberately trying to rort the system — some had just fallen foul of bad advice.
“Lying in an Indonesian hospital after a motorcycle accident would be a terrible time to discover that you aren’t covered,” Ms Ball said.
“We’re being told that recommendations from friends, social media, and travel forums and shopping deal websites, as well as the far-too-common practice of not reading the policy documentation, are the principal reasons expats are buying these invalid policies.”
Ms Ball said insurers were increasingly getting wise to the practice, and using immigration information, social media posts and utility bills to determine whether travellers lived in Australia or if they were insurance cheats.
The other problem with the travel insurance hack was that it drove up the costs for everyone.
“Travel insurance is for the unexpected while on holiday, not long-term health management,” Ms Ball said.
“If expats are constantly claiming on travel insurance policies, unfortunately premiums go up across the board for everyone.”
Ms Ball also warned “already overseas” travel insurance policies — a newer form of coverage some insurers were starting to offer — didn’t cut it, either.
1Cover, DUinsure and TravelInsuranz are among the few providers who offer already overseas insurance but they weren’t intended for expats living abroad.
“1Cover’s Already Overseas travel insurance policies are just that — travel cover for residents of Australia who are holidaying overseas, who either forgot to get insurance before they departed, or who bought a policy but it has since expired. They aren’t designed for the unique needs of expats living outside Australia permanently,” 1Cover chief operating officer Richard Warburton said.
“While expat health insurance might be more expensive than travel cover in the short term, trying to claim on an invalid policy can cost you a lot more in the long run.”
1Cover’s already overseas plan is only valid for Australian residents, and means expats could face large bills when claims are denied.
Ms Ball recommended people sought relevant, current insurance advice from people and sources qualified to give it.
“Travel insurance is a financial product like any other, so don’t settle for anything less than expert guidance. Look for writers certified to give Tier 1 or Tier 2 advice, and with specialist knowledge in travel insurance,” she said.
“While strangers on Facebook, bloggers, and even major websites might mean well, they may not be giving advice that is right for you or your circumstances if they don’t know the travel insurance space inside and out.
“As always, whether you get your tips from the best experts or your best mates, read through the Product Disclosure Statement yourself so you know exactly what you’re covered for. The commenter on Facebook isn’t going to have to foot your medical bills if something goes wrong.”