Health Insurance

Best Buys, Top Deals and Essential Tips for Health Insurance You Can Rely On

Updated June 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.
  • The cost of cover ranges based on age, health and gender. Women of equal age and health can pay around 10% more than men for the same health insurance policy.
  • Quotes and policy inclusions vary, so shopping around is essential to save the most on basic cover.
  • ​Like all insurance, the level of excess influences the policy price. From our examples, we found consumers could save around 30% by taking a policy with an excess of $500 or $1000 when compared to a policy of zero excess. 
Health Insurance - Do You Need It?
With New Zealanders offered some of the best free public healthcare in the world, private health insurance is arguably very much 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. 

New Zealanders take out health insurance policies for many reasons. For example, a personal preference to be treated in private hospitals or the desire to avoid waiting lists. But health insurance won't cover serious things such as organ transplants, nor will it reimburse you for any cosmetic procedures. Health insurance simply gets you in front of the doctor or surgeon without the wait you may have by using the free public system.  

Taking out health insurance 
  • 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 an 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. 

Important - 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. 

“not covered” vs “exclusions” - what’s the difference?

  • ​Most policies don’t cover specific standard treatments, such as dental care and physiotherapy - these are known as "not covered". 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 (usually) fall under “not covered” (unless your policy specifically permits it):

  • 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 (usually) 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 and no insurer will take the risk. 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. For this reason, 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, a popular option is health insurance with unlimited cover for 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 will 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 policies offer lump sum payment upon a diagnosis to help with family expenses, but health insurance does not cover loss of income or financial hardships.
  • 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 and if any family member has a pre-existing medical condition, it may be cheaper to insure him or her 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 to (or the same as) the ones you can buy privately. Check what and who 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 offer a scheme you could join. 

Private Health Insurance: 11 Need-to-Knows and 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 with 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. 
​

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
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​“I had health insurance from when I was 40 and it was cheap to start with, but gradually has crept 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
​

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 priced 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, so be careful and read our switch section below. 
​

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. 
​

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%
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%
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. 
​

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 straightforward; we suggest 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. 
​

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.​
​

Compare your policy to our quotes

​Every 3 months we obtain 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, but each policy is unique in its offering.  
​

​Ready to buy health insurance?

Once you’ve become familiar with the basics and have made a decision to get health insurance, it’s time to get the best quote for your needs.
 
Get the best policy without becoming overwhelmed by the details

Tip 1 – Read our Best Buy Health Insurance policies below to get an idea of price and coverage
We have put together a number of quotes from health insurers for a sample of individuals. We understand everyone is unique, and for this reason the price data is presented as an indicative guide to a range of policy prices available. The purpose is to help individuals understand the cover level and make it easier to pick the right policy while reducing the chance of overpaying for cover.  

Tip 2 – Compare prices using specialist health insurance price comparison websites - their prices will often beat what the insurer quotes directly
LifeDirect (owned by Trade Me) and InsureMe both cover a range of big brand and some lesser known insurers. You can get a number of quotes in less than a minute, and a summary of the policy benefits to make a comparison. If you go to the insurer directly, we are aware that in some cases the premiums quoted can be higher. Using price comparison websites gives you an easy way to get a benchmark price.  

Tip 3 – Contact an insurance broker if you have specialist needs
Insurance brokers are the experts and will have access to market information and quotes that you won’t. If you have a specific medical situation or want to talk to someone about a particular issue, searching for recommended local brokers is the way to go. As mentioned above, not every insurance company works with brokers, so the policies offered by a broker may not be the full range available in the market. 

Tip 4 - Check your policy
Make sure the quote offers the right coverage, and consider what excess levels or extra coverage you are happy with. Higher excess and less coverage means a cheaper quote, so it’s worth adjusting the policy details to save money right away.
​

Health Insurance Best Buys

Every Policy is Different
  • Health insurance policies aren't easy to compare. For this reason, we are not offering a like-for-like comparison.
  • All insurers offer different cover - some areas come standard, some are optional and others offer other pricing perks.

Our Methodology 
  • To make our findings fair, all the quotes we obtained were for a $0 excess (so you pay nothing towards a claim) and had unlimited outpatient care and full cancer treatment coverage(?????)
  • We obtained quotes for three example individuals, all non-smokers - a 35-year-old healthy male, a 35-year-old healthy female and a 70-year-old healthy male.
  • For an easy-to-follow policy comparison between all health insurance providers, download our PDF Guide
35-year-old male, non-smoker
Insurer Annual Premium Policy and Provider
Done Health $611.87 Standard policy (provided by nib nz Limited)
nib $611.87 Standard policy
Accuro $628.71 Smartcare policy
Southern Cross $670.00 Wellbeing One policy
AA Health $695.24 Private Hospital and Specialist policy
AIA $793.22 Standard policy
Kiwicover $878.04 Standard policy (provided by Sovereign)
35-year-old female, non-smoker
Insurer Annual Premium Policy and Provider
Southern Cross $569.47 Wellbeing One policy
Accuro $602.21 Smartcare policy
Sovereign $762.84 Healthy by Sovereign
nib $788.93 Standard policy
AIA $819.10 Standard policy
Partners Life $875.73 Private Medical policy
70-year-old male, non-smoker
Insurer Annual Premium Policy and Provider
Southern Cross $3,072 Wellbeing One policy
accuro $3,097 SmartCare+
Partners Life $3,356 Private Medical policy
nib $3,751 Ultimate Health
Sovereign $3,838 Healthy by Sovereign
Quotes obtained in June 2018 from Done Health Covered, nib, Accuro, Southern Cross, AA Insurance, AIA Insurance and Kiwicover

Claiming on Your Health Insurance

Step 1 – Visit your GP
  • If your GP refers you to a specialist, ask them to provide you with an 'open referral' - this lets your insurer find the appropriate specialist and/or hospital for your treatment.
  • If your GP has recommended a specialist already, ask your insurer if the treatment meets the policy (see below)

Step 2 – Contact your health insurer's claims team
  • Have your policy number (outlined on your policy documents) and details of your condition, including symptoms, dates and diagnosis (if known) and what your GP has told you.
  • All information relating to your referral - including the name of the specialist (if known)

Step 3 - Get a diagnosis, treatment or surgery
  • Your insurer will then assess your situation and confirm whether the treatment is covered. 

Step 4 - Your insurer pays the bills
  • Once you are approved for cover, your medical treatment costs become the responsibility of the insurer (within the limits of your policy)
  • All eligible bills will be paid by the insurer directly to the treatment provider.
  • In instances that you do receive a bill, you will need to send it to your insurer's claim team who will either pay the provider directly or reimburse you if you have already paid it.  

What if the insurer won't cover my medical treatment?

If your claim is rejected, appeal and complain
  • Jump on the phone and explain why your claim meets the T&Cs of the policy you bought.
  • If they don't agree, you can complain with the Insurance & Financial Services Ombudsman Scheme which resolves disagreements between customers and their insurers.
  • Their free-of-charge service will make the final decision about your claim and order the insurer to pay out if they find in your favour. 
  • If your insurer isn't a member, you can complain to Financial Services Complaint Ltd who follow a similar process.