Health insurance: what it pays for

New Zealand’s public health system provides treatment free or heavily subsidised, and for acute and emergency care it is what almost everyone uses. Health insurance is not a replacement for it. It buys three things the public system rations: speed, choice, and access to treatments that are not publicly funded.

The core distinction is between the surgical benefit, which handles the operation, and the specialist and diagnostic benefit, which handles everything before it. A policy with surgical cover but no diagnostic cover can leave you paying privately for the consultation and the scan that establish you need the operation — or waiting in the public system for them.

Pharmac decides which medicines are publicly funded in New Zealand, and its budget is finite. Medicines that are approved for use here but not funded must be paid for privately, and for some cancer and specialist treatments the cost is very substantial.

That is the single most common reason New Zealanders buy health insurance, and it is where policies differ most. Cover for non-Pharmac medicines can be a core benefit or an optional add-on. Limits differ dramatically between insurers — some express them per condition, some per year, some over a lifetime. Conditions attach too: the medicine usually has to be approved by Medsafe for the specific indication, and there may be requirements about where it is administered.

Pre-existing conditions

Health insurance is not underwritten once and then guaranteed the way life cover is. Conditions you already have when you apply are typically excluded, either permanently or for a stated period, and the exclusions are recorded on your policy. That is why health insurance is best bought before you need it, and why moving between insurers later can be costly — a new insurer will exclude anything that has developed since you took the original policy.

Age-rated premiums

Unlike life and trauma cover, health insurance premiums are generally age-rated with no level option. They rise every year, and they rise fastest exactly when claims become most likely. This is the main reason people cancel health cover in their seventies, and it should be part of the decision when you buy it at forty.

Excesses

Choosing a higher excess is the most effective way to reduce the premium, and it works the same way as it does on any other insurance: you self-insure the small claims and insure the large ones. For a household that could fund a few thousand dollars if it had to, a higher excess is usually the right trade.

Every New Zealand insurer writes health insurance to its own wording, and the words are where the money is. Two policies that look identical on price can pay very differently when it matters. Closing that gap is the entire job of an adviser.

• Non-Pharmac drug limits differ enormously — per year, per condition, per lifetime — and this is the benefit most worth comparing.
• Whether specialists and diagnostic tests are included or optional changes both the price and the usefulness of a policy.
• Pre-existing condition wording differs on how long an exclusion lasts and what can be reviewed later.
• Switching insurers can restart exclusions for anything that developed since your original policy, so a comparison must weigh what you would lose.
• Employer-provided health cover often has continuation options on leaving that are time-limited and easy to miss.
• Some insurers offer premium structures that soften age-related increases; the differences are worth modelling into your seventies.

There are three ways to buy life cover in New Zealand, and they are not equivalent. You can buy direct from one insurer, which means you see one product range and one underwriting appetite. You can buy through your bank, which usually means a single insurer’s product sold under the bank’s brand, often with narrower definitions. Or you can go through an adviser, who quotes several insurers at once and is required to put your interests first.

The premium you pay is the same either way. Insurers build adviser commission into their pricing whether or not an adviser is involved, so going direct does not get you a discount — it just removes the person whose job is to argue your corner at application and at claim time.

• An adviser can see which insurer is currently taking your health history on standard terms, and which one will load or exclude it.
• An adviser can structure cover across two insurers if that produces a better outcome than putting everything with one.
• An adviser handles the underwriting back-and-forth, and is the person who chases the claim when a family is least able to.
• An adviser has to document why the recommendation suits you, which is a written record you can hold them to.

We are a referral service, not an insurer. We do not quote premiums and we do not sell policies. What we do is put you in front of one licensed New Zealand adviser who can compare the market properly.

1. 1

   You tell us what you are looking at

   The form takes about a minute. Nobody asks for your medical history on a web form — that conversation happens with the adviser, properly, and only once you have decided to proceed.

2. 2

   An adviser calls you

   A licensed New Zealand adviser talks through your situation: who depends on you, what you owe, what you already have in place, and what you are actually worried about.

3. 3

   They compare the market

   The adviser quotes across the major insurers, checks which of them will take your health history on the best terms, and puts the options side by side in writing.

4. 4

   You decide, in your own time

   There is no obligation and no cost to you. If the answer is that you already have enough cover, a good adviser will tell you that.