Choosing a Health Fund in Australia: Does Size Impact Your Benefits?
Published December 3, 2025
Family health insurance in Australia should be selected with much deliberation concerning the coverage of each family member. Usually, the family policies will be more value-for-money compared to the individual policy, especially in the instance of dependants and children. If you are ready to commit to private health insurance, do not think that bigger funds are always better, smaller health funds Australia can often provide more benefits and better value for your family.
Size doesn’t always matter when it comes to health funds
With a good number of private health funds operating in Australia, most people assume that the biggest ones must have the best value. After all, there must be a reason why such funds take the lion’s share of the market, because insurance service provider alone, for example, insures more than half of all privately insured Australians.
But does size actually mean more cover or better returns for the policyholder? Not necessarily, as straightforward as that sounds. While large funds have more brand recognition and wider-reaching hospital agreements, they don’t necessarily offer the best value. In fact, smaller member-focused funds often return more in benefits, have better customer satisfaction rates, and charge less in premium.
Let’s now look exactly at what you should be considering when you’re in the middle of choosing a private health insurance provider Australia.
For-profit health funds put shareholders first
For-profit health funds seek to make returns on behalf of their shareholders. This has implications in a number of ways that may be relevant to your choice of health fund:
- Some of the member premiums are given to corporate dividends rather than reinvested in member benefits.
- There is usually pressure for increased premiums every year to increase profits.
- In some instances, exclusions and restrictions are included in policies to control costs.
The not-for-profit health funds have many membership benefits
The not-for-profit health funds, such as HCF and GMHBA, put their members before profit. Their biggest aim is to reinvest revenue into better cover and fewer out-of-pocket costs.
Top benefits of smaller health funds Australia
Although larger funds generally dominate, smaller health insurers have been able to establish niches for themselves in the market, focusing on their ability to provide superior member experiences, competitive premiums, and more tailored policies.
- Higher member benefits: Smaller health funds Australia return a greater percentage of premiums back to their members in the form of claims and benefits.
- Great customer service: With fewer members to manage, smaller funds can deliver a much more personal and responsive customer service experience. Unlike major providers, where members will have to deal with long wait times and bureaucratic red tape, smaller funds are usually more accessible and flexible.
- Competitive on premiums, fewer annual increases: For Australians, premium increases become a big concern in these cost-of-living crisis times. While the large insurers will pretty much be guaranteed to roll out hikes in premium every year, some of the smaller funds have been able to keep their price increases to a minimum comparatively.
Larger funds are not always the cheapest
Contrary to popular opinion, larger funds do not always charge the cheapest premiums. In fact, their pricing structures can be more expensive, thanks to massive administrative overheads and the need to pay out dividends to shareholders.
Smaller funds can have lower-cost but still high-value policies, particularly industry-specific ones like Police Health, Teachers Health, Defence Health, which have been tailored to their members’ needs. There are also regional health funds with competitive pricing models to attract members in certain parts of the country.
So, do you think that Bigger = Better?
- Not necessarily. Whereas big funds do own the biggest slice of the market, they may not necessarily deliver the best value.
- Not-for-profit funds tend to return more for their members in terms of benefits and customer satisfaction.
- Comparing policies is a must. Bigger does not mean better, and a lesser-known fund may be able to give you the better value you’ve been looking for.
If you are ready to commit to private health insurance, don’t assume that a bigger fund will always be better. Yes, larger funds have wider hospital agreements and plenty of brand recognition, but smaller funds can give you more benefits and cheaper premiums with much better customer service in many cases.
Curious about the benefits of smaller health funds Australia? Connect with Utility Market on LinkedIn for expert tips, insights, and comparisons to help you choose the best plan for your family.
