Existing policy review
Can a higher excess reduce your health insurance premium?
A higher excess will generally reduce a health insurance premium, but the available options, exact saving and way the excess applies depend on the policy. Compare the annual premium change with the amount you may need to fund when making an eligible claim.
The short answer
Consumer Protection says a higher excess will generally produce a lower premium. Consumer NZ makes the matching caution: choosing a higher excess increases the amount paid when an eligible claim is made. The policy must offer the option, and the insurer must confirm the actual premium change.
Compare the annual saving, the cash available at claim time and the cover that remains. A lower monthly payment can still create pressure if the excess cannot be paid when treatment is needed.
Understand the trade-off
The premium is the regular cost of keeping the policy. The excess is an amount the policyholder contributes to an eligible claim under the policy rules. The size and timing of each amount create different household-budget questions.
Ask for a written quote at each available excess level. Compare totals over the same period and keep every other benefit and assumption consistent.
- Annual premium at the current and proposed excess.
- Cash available without missing essential expenses.
- Which eligible costs the excess applies to.
- How often and for whom the excess may apply.
- Whether another excess change can be requested later.
Confirm how the excess applies
Policy rules vary. Ask whether the excess applies per person, per claim, per treatment event, per policy year or in another way. Also ask whether separate benefit groups use different excesses and whether more than one household member could face an excess in the same period.
Use the insurer’s current wording and written answer. A generic example cannot show how one policy will respond, and the excess does not turn an excluded treatment into an eligible claim.
Illustrative scenario: comparing two written excess options
A household asks its insurer to quote the existing excess and one higher option while holding the benefits constant. It compares the annual premium difference, checks when the higher excess would apply, and sets aside enough accessible cash to meet it without using money required for essential bills.
This illustrative scenario combines common enquiry questions and does not correspond to any real client. Actual policies and outcomes depend on personal circumstances, policy terms, underwriting and the insurer’s decision. The scenario does not promise a premium reduction of any size or recommend an excess.
Use a household cash test
Start with the written annual premium difference rather than looking only at the monthly direct debit. Test whether the proposed excess could be paid promptly during a difficult month and whether more than one eligible claim could affect the budget.
If meeting the excess would delay treatment or require expensive borrowing, the ongoing premium saving may not solve the household’s affordability problem.
- Compare annual premiums over the same dates.
- Identify funds accessible at short notice.
- Test claims involving more than one insured person.
- Allow for treatments spanning dates or policy years if relevant.
- Include exclusions, limits and non-covered costs in the budget.
Check the change itself
Ask when the new excess would begin and whether changing it affects any benefit, special term, discount or payment arrangement. Ask what process would apply if the policyholder later wanted a lower excess.
If a broader product change or replacement is proposed, separate that decision from the excess comparison. Fresh underwriting, different definitions and new exclusions can be more significant than the premium difference.
Written comparison checklist
Keep the quote, policy wording and answers together as the starting point for the next annual review.
- What excess choices are available under this policy?
- What is the annual premium for each option?
- How often, to whom and to which benefits can the excess apply?
- Which costs remain excluded or limited?
- Could the household pay the excess promptly without expensive debt?
- What process applies to a later request to reduce the excess?
Four common questions
Q: Will a higher excess always lower my premium? A: It generally does, but only the insurer can confirm the options and price for the actual policy.
Q: How much will I save? A: There is no reliable universal percentage. Request written annual premiums for the available options.
Q: Is the excess charged on every medical bill? A: The answer depends on the wording, eligible benefit and insurer’s application rules.
Q: Can I lower the excess again later? A: Do not assume that. Ask about the options, effective dates and approval process.
Sources
This article is general information only. It does not take your personal circumstances into account and is not financial advice.