Health Insurance

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Reduce the cost of medical insurance right now

Best Buys and Top Deals For Health Insurance You Can Rely On

Updated January 2018
Summary of Health Insurance
  • Health insurance can be regarded as a luxury in New Zealand - our state healthcare system offers every medical procedure a standard insurance policy covers.   
  • Women of equal age and health pay around 10% more than men for health insurance.
  • Quotes vary, so shopping around is essential to save the most. Sovereign, for example, charges 20-35% more per year than Southern Cross for similar policies. Comparing is everything. 
  • It's around 30% cheaper to take a policy with an excess ($500 or $1000) compared to a policy for zero excess. 
With New Zealanders offered some of the best free public healthcare in the world, private health insurance is a luxury and not a necessity. Waiting lists aside, Kiwis enjoy comprehensive medical treatments when they need them and free aftercare. Irrespective of your income level, savings or age, you have the same right to medical care as the next New Zealander when you need it. 

If you decide to insure yourself with a health policy, there are a few ways to bring down the costs per month so that it is more affordable. In this guide we explain how health insurance works, the best offers and deals available and important things to know. 

The Purpose of Health Insurance
It’s important to know that the purpose of health insurance is to cover you financially for urgent treatment and surgeries that you would otherwise wait for on the public/state system. Having health insurance does not entitle you to claim for anything medical-related. In fact, there are many exceptions to what is covered, as we outline and explore below. 

Our Guide Covers:

Health Insurance basics – what is it, and what is covered?

Health insurance, also known as “medical insurance”, covers the cost of any private medical treatment you receive for ‘acute’ conditions. You pay a premium to cover you for treatment for any acute condition, such as diseases, illnesses or injuries. There are many different policies available, generally offering more coverage/treatments the higher the premium. In summary:
  • You pay a fee (usually fortnightly, monthly or annually) to an insurer who in turn pays out expenses related to medical treatments, i.e. hospital care, surgery and post-surgery care. 
  • You are treated with priority, meaning there is no waiting list or referral process. You get treated without delay. 
  • Treatments and care are done outside of the public system, i.e. at private hospitals and clinics. 

What’s important is choosing a policy that covers you for what you are likely to need

This is where fine print matters most. Basic cover should include the following:
  1. Surgical cover – for example surgery for acute illnesses such as cancer
  2. Non-surgical cover – for example, allergy treatment
  3. Major diagnostic tests – covering procedures like biopsies and mammograms
  4. Non-Pharmac cover – coverage for drugs not subsidised by Pharmac (essentially the New Zealand Government) for specialised drugs you may need
  5. Overseas treatment – cover if the treatment you require cannot be performed in New Zealand (although this is rare).

​Your individual needs will help you decide how much cover you need. It’s pointless insuring for GP visits if you rarely visit the doctor and/or can afford them, but at the same time being under-insured could create stress for you and your family later on if your cover is not enough to pay for the medical treatment you need. 

What’s “not covered”, what are “exclusions”, and what’s the difference?

​Most policies don’t cover a number of standard treatments, such as dental care and physiotherapy. We have listed some examples below, but it’s important to check the policy you buy to see what specifically is not covered. The standard treatments that fall under “not covered” are different from “exclusions”. “Exclusions” are claims for the medical treatment relating to, or caused by, specific illnesses or conditions that your health insurance will not cover. Examples of exclusions include claims for the treatment of dementia, pregnancy complications and organ transplants.  

Examples of items that fall under “not covered”:

  • GP consultations
  • Dental care
  • Optical care (i.e. contact lenses and/or glasses)
  • Allied health treatment such as Physiotherapy , Chiropractor or Osteopathy
  • Acupuncture, traditional Chinese medicine and remedial massage
  • Speech therapy
  • Any mental health treatment. 

Examples of items that fall under “exclusions”:

  • ​Chronic conditions (explained in detail below)
  • Cosmetic treatment/procedures
  • Dementia
  • Fat grafting and liposuction
  • Gender reassignment surgery
  • HIV/AIDS, and any medical condition that arises from it
  • Infertility or assisted reproduction (IVF)
  • Illness caused or contributed to drug or substance abuse
  • Organ transplants, transfusions of autologous blood/blood products
  • Self-inflicted illness or injury
  • Unapproved healthcare services

What are Chronic conditions?

​Chronic conditions, such as arthritis or asthma are not covered by standard health insurance policies, given they need ongoing treatment, monitoring and have no known cure. Insuring such conditions would be impossible as the cost of treatment to an insurer is unknown. For this reason, they are excluded from being covered by standard health insurance policies. 

Do I need health insurance? Can’t I use the public system?

​Health insurance works alongside the services provided by the Ministry of Health. If you have a health insurance policy, you are still entitled to full state health services as you would be without a policy. Our advice is that health insurance is only of benefit if you want to avoid waiting lists and have urgent consultations and specialist treatment. If you are happy to wait for treatment, health insurance has limited benefits. 

What are Pre-Existing Medical Conditions, and how do they affect health insurance?

​A medical condition for which a patient has already received medical advice or treatment prior to applying for health insurance cover is a “pre-existing” medical condition. Some health insurance policies cover a limited number of pre-existing conditions. However, it’s standard that applicants with hip or knee conditions, a back condition, cancer or Cardiovascular conditions will not be covered for medical treatment that relates to those conditions. You can still get health insurance, and it will cover unrelated illnesses, but the premium may be higher as you are assessed as a higher risk client. 

What do standard treatments cost in New Zealand? My policy has a limit of $60,000 per year for chemotherapy. Is that enough if I get cancer?

​The answer is it depends, and treatment costs could well exceed $100,000 if the cancer is aggressive or returns within one year, or if you need drugs not covered by the government health system. For the certainty of complete care, we recommend health insurance with unlimited cover when it comes to cancer, given it’s the most common cause of death in New Zealand. 

If I have a policy and now need treatment, what do I do?

​The good news is that the process is largely handled for you. Your GP will contact your insurer to request cover and/or refer you to approved providers. The more comprehensive your policy, the more options you have available for treatment. 

Can I switch policies and save money?

  • Yes, but be careful. If you are young and do not have any health problems, then there should be no problem.
  • However, if you have developed medical conditions after taking out your current policy then it may be difficult to get cover for such existing conditions as a new health insurance company will see them as “pre-existing medical conditions”.
  • As you get older, you’re more likely to be tied to your provider as they know your medical history and adjust your policy premium accordingly.
  • If you are determined to switch, take some time to make sure all the coverage is the same (or better) before leaving your existing provider. 

Does my health insurance cover loss of income and mortgage repayments if I become ill?

  • In most cases these situations are not covered. Some polices offer lump sum payment upon a diagnosis to help with family expenses, but loss of income or financial hardships are not covered by health insurance.
  • If you would like to insure for loss of income etc, you are best to do it with a dedicated provider of critical illness insurance.
  • Critical Illness insurance is a separate insurance policy that provides a lump sum payment if you develop an illness covered by your policy. You can use this lump sum to pay for family expenses (mortgage, rent etc) while you recover. The lump sum is only paid once. 

Will my health insurance policy cover my children and partner?

  • ​No - only family policies cover a family. You can insure each family member separately, although this is uncommon, but if any family member has a pre-existing medical condition it may be cheaper to insure them separately.
  • Make sure you are clear about what your family needs, and that the policy you get is appropriate. Our guide below includes best buys for family insurance. 

My employer offers a workplace scheme. Do I need to buy cover?

  • ​Some Kiwi employers offer a workplace scheme with policies similar or the same as the ones you can buy privately. Check what is covered (yourself, or yourself and family) and make sure it’s appropriate for your needs. If you don’t have a scheme, check if your partner's employer may offers a scheme you could join. 

Private Health Insurance: Your 10 Need-to-Knows

Health Insurance – what to consider before getting a policy

​Kiwis buy Health insurance to cover them for a range of illnesses and ailments, minor to life-threatening.  Before taking out a policy, read through our “10 Need to Knows” to see if health insurance is right for you, how to pick the best provider and get the lowest price. 

You may not need health insurance as the public health system covers a lot

​New Zealand is one of the few countries that provides its residents free healthcare. For this reason, we see health insurance as an optional luxury. Additionally, health insurance doesn’t cover every medical treatment – cosmetic surgery and transplants are both excluded, so it’s important to work out what you need before you buy a policy. 
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Consider “Self-insuring” if you are low risk or can afford treatments.

If you’re young (less than 40 years of age) and healthy, there is less chance you will need to claim on health insurance. You can save yourself $500+/year and put the money in the bank.  If you do need any medical treatment, it’s likely the public health system will cover you. If they don’t, or if you want to speed up the treatment, you can draw down on the money you have saved by not having a policy. 

Reader's comments

​“We pay $6,000 a year and it’s unaffordable, especially as our combined income is $80,000 and we still have a mortgage. We’re not going to renew the policy when it expires. The public system is pretty good and we see health insurance now as a luxury”. – Debra, 58, Whangarei

​“I had health insurance from when I was 40 and it was cheap to start with, but gradually has creeped up to $4,000 a year (I’m approaching 70). What I have paid over the years is much more than I’ve claimed. I cancelled it and will use the savings to fund any treatments required in the future if the public hospital can’t help”. – Don, 68, Queenstown
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Many policies don’t cover pre-existing conditions, but you must check as it’s possible to get cover for your specific ailments

  • The purpose of health insurance is to cover conditions that arise after your policy starts, not to cover every health issue you already have. However, some policies may provide cover for pre-existing conditions after a certain period (usually 3-5 years) from your policy starting. We cannot give a complete list of pre-existing conditions that may or may not be covered, as it depends on your history and their severity, as well as the insurer’s offering.
  • Generally pre-existing cancer, issues with knees, hip or back, transplant surgery and anything to do with cardiovascular conditions (i.e. diabetes, high BP or abnormal Cholesterol) won’t be covered.
  • Your pre-existing condition may be covered by public health treatment, so it’s best to check if you don’t already know. If you do want to have cover for the condition, find a policy that offers pre-existing cover and contact the company offering it to talk through your case. 
​

Health insurance policies cost more as you get older – there are no fixed price policies for life.

​When it comes to the price of policies, here are the key facts:
  1. Generally, the rule is that you pay more for health insurance the older you get, as you’re more likely to need medical treatment.
  2. Health insurance policies are quoted at the age when you apply, and usually increase annually at a rate often above inflation.
  3. You won’t be covered for pre-existing conditions if you switch, be careful – see our “switch” guidance above (LINK).

Pay upfront or by direct debit to save more

Most insurers offer discounts if you prepay a year in advance. For example, Southern Cross will offer 2.5% off if you pay by direct debit. NIB will offer up to 4%. Don’t pick a policy based on a discount; the only thing that matters is to make sure the coverage is right for you . 
​

Healthy lifestyles save more

​Many insurers offer a discount for having a “healthy lifestyle”. For example, Southern Cross offers up to 10% off a policy cost is you meet their requirements (sufficient servings of fruit and vegetables per day, regular exercise for 30+ minutes, consume small amounts of alcohol and don’t smoke)
 
If you can show your insurer that you have a healthy lifestyle, you are likely to save. 
​

Ignore perks, rebates and special offers, they don’t matter when it comes to your health.

"No claim" bonuses are nice to have and some insurers offer cheap gym membership, but you must always look at the policy and make sure it suits you. Free gym membership means nothing if you find yourself not covered for an illness you develop. 
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Pick a high insurance excess to get a cheaper policy if you can afford it.

  • ​An insurance excess is the amount you pay to make a claim. Policies offer a set amount of excess, and it’s for you to decide. Popular options include “no excess” (meaning you pay nothing to make a claim), “$500 excess” (meaning you pay the first $500 of any claim you make) and “$1,000 excess” etc.
  • The annual cost of your premium is LOWER the higher the excess. For example, taking out an individual policy for a 35 year old male and 35 year old female (both non-smokers), we found an average saving of 31% ($240/year for males, $281 for females).
  • If you can afford to pay $500 or $1000 on a claim, we recommend saving money from day 1 with a higher excess. Should you change your mind or if your financial circumstances change, you can contact your insurer and adjust your excess for any future claims. 

Example Health Insurance Quotes: 35 year old male, non-smoker

Insurer No Excess $500 Excess ​$1000 Excess Difference ($1000 vs $0 excess) ​% Savings
Southern Cross $643 $547 $482 ($160) ​25%
NIB $756 $567 $492 ($264) 35%
AIA $820 $638 $602 ($218) 27%
Sovereign $876 $651 $554 ($322) ​37%
Average ​$773.75 ​$600.75 ​$532.5 ​($241.25) ​31%

35 yo female, non-smoker

Insurer NoExcess $500 Excess ​$1000 Excess Difference ($1000 vs $0 excess) ​% Savings
Southern Cross $643 $547 $483 ($160) ​25%
NIB $909 $682 $592 ($317) 35%
AIA $976 $756 $712 ($264) 27%
Sovereign $1029 $761 $646 ($383) ​37%
Average ​$889.25 $686.5 ​$608.25 ($281) ​31%
​Our advice: If you go for a high excess policy, make sure you have enough money saved to cover the $500 or $1000 excess fee per claim. 
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Use a price comparison site as a guide, and consider using a broker to get the lowest price and best advice

  • Compare prices online. An informed customer usually gets the best deal, and most appropriate coverage. We recommend going to LifeDirect to get a benchmark as it displays 5-7 health insurance policies.
  • Pre-existing conditions? If you have pre-existing medical conditions, we recommend using a broker – brokers are the most experienced when it comes to non-standard needs.
  • Contact a broker. Once you know the quote range from your online search, see if a broker can do better. Many insurers do not appear on LifeDirect, so it’s important to keep looking. 

How to find and choose a broker?

Finding a broker to help you isn't so straight forward. We recommend using Google to search for local brokers who specialise in health insurance. It's also worthwhile asking a friend or family member if they can recommend a broker. 
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Make sure you understand the policy and what it covers (and doesn’t cover!)

  • Once you've checked the comparison sites, brokers, and insurers you should have a shortlist of your best quotes. Whatever policy you choose, first make sure you know all the key features before you buy, then check that you're getting the best price.
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Compare your policy to our quotes

​Every 3 months we ask for quotes from the big health insurers. To make it comparable, all quotes have no excess (so you pay nothing when you claim). Unlike other insurance, health insurance policies are not easy to compare. The range of cover differs for many conditions, some are standard and some are optional. We present a range of standard cover from each company. 
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