Margin loan for emergencies -- a noob question

elpechos said:

Most (all?) medical insurance I can find have limits far beneath what the surgeries realistically cost these days

medibank extras for example only runs $2,000 of major dental a year, not enough for even 1 tooth and crown

Medium levels of cover don't even cover replacements like Hip & knee joint replacement surgery /at all/ until you get to the ultra level of covers which runs ~$5,000 a year. At this rate with interest I could afford to completely replace everything in a very good hospital without risking my life on the whims of some insurance company anyhow in under ten years.
Rather than get second rate service from private health insurance and only get 60 to 70% of the total cost back for 'some' problems. Wouldn't it be better to have 100k of capital after 10 years I can resolve /any/ ermergency with, rather than just some?

Click to expand...

You're working through the question I think most of us with private health insurance have asked ourselves.
I agree that the Extras cover is hardly worth having. I've had top level cover for more than 20 years and have only ever used the Extras part for routine dental exam/clean twice a year, plus some shoe orthotics. Absolutely not cost-effective. But for others who have a lot of dental work done plus physiotherapy, podiatry etc, they probably get good value.

But I keep it, especially the top hospital cover, because none of us know when we may need some lifesaving surgical intervention. Some complicated procedures can cost hundreds of thousands. And no, your insurance will not cover it all. It's just a fact of life that most policies are still going to involve a gap payment, due to doctors being able to charge more than the Medicare schedule fee.

I'd much rather pay the relatively reasonable private cover premium each year than worry about a margin loan or having to sell shares perhaps when the market is in a significant downturn.
How are you going to feel if you're well in profit, then whacko, another GFC or 1987 even occurs, and it coincides with your need to front up with $100K for an urgent operation? You'll be compelled to give back significant profit when selling yet still trigger CGT.
Hardly worth it for around $2K p.a. is it?

The best alternative to this would be to increase the size of your emergency fund. If you're not comfortable with what you currently have to need to consider like this, increase your emergency fund by 10-20k I would suggest.

Another possibility is to have a regular loan as opposed to a margin loan. I have an investment loan which I was using to buy and sell shares, which I currently don't use due to the state of the market. I have paid it all back, minus 10 dollars, so that the full amount of the loan is always there if I need it - whether it be $500, $5000, or $15000, etc. But no need to worry about margin calls.

prawn_86 said:

20 - 40k for non elective surgery here in Aus? What sort of procedures cost that? Even for dental i can't imagine spending 20k in an emergency.

Click to expand...

An emergency Brest Augmentation and 5 golds crowns.