Health insurance premiums rising in NZ: what to review before cancelling

A higher premium is a reason to review the policy, not enough information on its own to decide whether to cancel it. Start with what has changed in the price, what protection the current policy still provides, and which adjustments are available without assuming that a cheaper option is equivalent.

FMA guidance recommends reviewing insurance regularly and asking how premiums are calculated and what options are available. If replacement cover is being considered, do not cancel the existing policy until the new insurer has accepted the application, supplied the final terms and confirmed that cover is in force.

Read the renewal notice beside the current policy schedule, full wording and any endorsements. A premium may reflect more than one factor, including age, changes to the insured amount, a general pricing change, benefit design, excess, payment frequency or a change you previously requested. Ask the insurer or adviser to identify the applicable reasons rather than guessing.

Then describe what you still want the policy to do. Note the treatments or benefit categories that matter, the excess you could meet from savings, any special terms or exclusions, and any health conditions that arose after the policy started. Those details help distinguish a price change from a change in value.

Possible changes might include a different excess, fewer optional benefits, a different benefit structure, a lower level of cover, a payment-frequency change or removing duplicated protection. Availability and effect depend on the actual policy. Ask for each option in writing with the new premium and the exact cover change shown side by side.

Sorted cautions that price and cover can differ between policies. Consumer NZ also notes that a higher excess may reduce the premium but increases the amount paid when an eligible claim is made. An option is only useful if both the ongoing premium and the cost carried at claim time remain manageable.

There is no single public New Zealand average that cleanly compares every insurer, benefit design and excess at every age from 40 to 60. A useful way to isolate the age effect is to keep the plan and excess unchanged. Southern Cross's published rate card for March to June 2021 listed the annual direct-debit premium for one person on Wellbeing One with a $500 excess at $870.33 at age 40 and $2,131.88 at age 60. That is a 145% increase across the 20-year age curve, equivalent to about 4.6% a year compounded within that one historical rate schedule.

This is an illustration from one plan, not a current quote, a market average or a forecast of what one policy will cost in future. The same schedule rose more slowly in some five-year blocks and more quickly in others. It also does not include later insurer-wide repricing. Separately, the Reserve Bank of New Zealand reported in November 2025 that health insurance premiums had increased around 19% over the preceding year as claims costs rose. Do not add that market-wide figure to the age curve to predict your next renewal; ask for the reasons that apply to your policy.

Imagine a household where the adults are in their late 40s, with more than one person insured and optional benefits attached. The combined renewal reaches more than $1,000 a month. That total is large enough to demand a review, but it does not prove the household is overpaying and it should not be treated as a typical premium for one person. The first step is to split the total by each insured person, plan, excess, optional benefit, discount and payment frequency.

Instead of cancelling from the renewal email, the household asks for written versions of three options: keep the policy unchanged, alter the excess, or change selected benefits. It also asks what fresh underwriting would apply if it moved to another insurer. This is a fictional scenario, not a real client result or a New Zealand average. Actual options depend on personal circumstances, policy terms, underwriting and the insurer's decision, and a lower premium cannot be promised.

A new policy can have different definitions, benefits, limits, exclusions, qualifying periods and premiums. FMA warns that health conditions which developed after the existing policy began may be treated as pre-existing conditions under a replacement application. The new insurer can accept, modify, postpone or decline an application according to its underwriting process.

Cancellation is also hard to undo. Once the existing policy ends, restoring the same terms may not be possible. Obtain the final policy schedule, exclusions, special terms, start date and payment confirmation for any replacement before giving a cancellation instruction.

Keep the answers with the renewal notice and record who supplied them. A review may finish with no change, a change within the current policy, a carefully accepted replacement, or a decision to seek personal advice before acting.

Q: Does a rising premium mean I should cancel? A: No single price change answers that. Compare affordability, current protection and the consequences of losing or replacing the policy.

Q: Will a higher excess always be better? A: No. It may lower the premium, but you carry more cost when an eligible claim is made and the option must exist under the policy.

Q: Can a new insurer cover all of my current health conditions? A: Only the new insurer can decide after underwriting. Do not assume the existing policy's treatment of a condition will transfer.

Q: When should I cancel the old policy? A: Only after the replacement has been formally accepted, its final terms are understood and the new cover is confirmed in force.