I have to say: I am just in time with this post. In The Netherlands you can change your health insurance for 2021 only until the end of 2020. You always have to do it before the new year starts. That means you have 4 days left when you read this. But I am still posting this today because I know 4 days is more than enough to do it still. Today I’m sharing about a way to save money on your health insurance without actually having to change it.
I had hoped to also have published a post by now about which health insurances are most sustainable. I am full of inspiration and have a lot to write about and so I didn’t post that yet. So that’s something for next time. That doesn’t mean it’s not important. It’s very important since health insurance companies invest money! What they invest in determines if they are sustainable or not. We want them to invest in renewable energy and a fair market, no dirty oil or guns (just to name a few). For the tip I am sharing today it does depend at which health insurance company you’re a customer. But luckily it’s applicable on almost all of the Dutch ones.
Changing is Easy
The title says the tip I’m sharing today will make you save money. That’s true, but nothing will change on your health insurance itself. Because saving money on your health insurance in general is easy. You just cut out some things, insurance for the dentist of physiotherapist for example. But no, that’s not what I’m talking about today! If I would suggest that, you would have a higher risk. If then something does happen to your teeth, you have to pay for it all by yourself. No, this tip doesn’t involve more risk.
Paying All at Once
The tip of today: pay your health insurance all at once. In The Netherlands it’s standard to pay it by month. But you can change that and then you get a discount because there are way less administration costs for the health insurance company. Most health insurance companies give a 1% discount on your annual costs if you do this, some even offer 2% discount (and some don’t have this option unfortunately). Health insurance can cost a lot. In 2021 the average health insurance costs in The Netherlands are estimated at 123 euros each months (source). That’s 1476 euros a year. A 1% discount saves you 14,76 euros and 2% 29,52 euros each year. However, the higher your health insurance, the higher the discount.
Now, I understand that paying 1476 euros (or more) all at once is a lot. If you don’t have enough savings you won’t be able to do it within the coming 4 days. But that’s okay! You can start now for the next year after that, 2022. Let’s say you have to pay 123 euros on health insurance a month. You then have to save that amount extra every month (or 1 or 2% extra just to be sure because health insurance gets more expensive every year). By the end of the year you’ll have saved the money to pay the health insurance all at once. And then you can keep doing this. You just save the money ahead and then pay it at once. So from Januari 2021 you’ll save 123 euros each month. Then in December of 2021 you’ll pay the money for 2022 all at once (since you have saved it) and then do it again for 2023. It means you have to pay double this coming year (because you’re saving for 2022 but also paying for 2021), but that’s only for one year.
I get a 1% discount myself. Let’s say that’s 14,76 euros each year. Now, some people say this is not a lot. But first of all: this discount is basically free. There is nothing you have to change or do, only paying the insurance costs at once. In The Netherlands it’s mandatory to have a health insurance anyway, there’s no way around it. It’s mandatory from age 18 (if you’re younger you’re automatically insured on your parent’s name). The average age for a woman to die in The Netherland is 82,5 years (source). Theoretically a woman would then pay for insurance for for 64,5 years (82,5-18). 64,5 times the 14,76 euros you can save each year is quite a lot: 952,02 euros in a lifetime! That’s a small holiday you’d miss on. But that’s only if you save the money. If you invest the money you save it would be cumulative. Let’s say you have a return rate of 5% each year (by investing in a solar panel company on the stock market as an example). The formula for compound interest is EW = C (1 + i)^t. EW is your end worth. C is your beginning capital. i is the interest and t the nummer of year (time). Then you get EW = 14,76 (1,05)^64,5. EW = 7244,77 euros!!! I used a calculator (source).
Yes, you got that right. 7244,77 euros! By changing absolutely nothing about your health insurance itself but paying the money once a year I can make up to 7244,77 euros during my lifetime! I would have to invest the money (otherwise I’d have the 952,02 euros) and have a return rate of 5%. But that’s not impossible. Even if you decide to not invest it, 952,02 euros is also a lot of money. I just want to show you what 14,76 euros a year can do. This means: small discounts do matter. Also: the more money I save the sooner I’ll be FIRE-financially independent, retire early. This means I’ll have 7000 euros extra to spend! What would you do with 7000 euros?