How Insurance Works in New Zealand

KiwiSaver is primarily a retirement savings scheme, not life insurance. While some KiwiSaver providers offer limited life cover (often $10,000-$20,000), this is typically far less than what's needed to cover a mortgage, replace lost income, or provide for dependents long-term. Dedicated life insurance provides significantly higher cover amounts tailored to your actual financial needs. If you're unsure, we can talk it through and recommend the right cover for your situation.

Pre-existing conditions don't automatically disqualify you from cover in New Zealand. Insurers assess each application individually—some conditions may result in exclusions, loadings (higher premiums), or standard terms depending on severity and management. Full disclosure during application is essential. Many New Zealanders with managed conditions like diabetes, asthma, or past mental health issues successfully obtain cover. If you're unsure, we can talk it through and recommend the right cover for your situation.

No, you're not locked in. You can cancel most personal insurance policies at any time by notifying your insurer in writing. There are no exit fees or penalties for cancellation. However, reapplying later may be harder or more expensive due to age or health changes, and you'll lose any benefits built up under level premium structures. It's worth reviewing your policy before cancelling to understand what you might be giving up.

Yes, most policies allow increases or decreases to your cover. Increasing cover usually requires updated health and lifestyle questions or medical evidence, and the insurer may decline or apply conditions. Decreasing cover is generally straightforward. Many policies offer guaranteed increase options at life events (marriage, birth, mortgage increase) without medical evidence, up to set limits. Review your policy terms or ask us about your specific options.

Premiums are calculated based on age, gender, health, occupation, smoking status, hobbies (e.g., diving, aviation), sum insured, policy type, waiting periods, and benefit periods. Stepped premiums increase annually with age, while level premiums remain fixed for a period before switching to stepped. Insurers also review pricing periodically, which can affect premiums. The healthier and younger you are when you apply, the lower your premiums will generally be.

ACC covers accidental injuries in New Zealand, providing medical costs, rehabilitation, and up to 80% of your income (capped). However, ACC doesn't cover illnesses (like cancer, heart attacks, or most causes of disability), doesn't provide lump-sum payouts, and has income caps that may not match your actual earnings. Personal insurance fills these gaps—covering illness and injury, providing lump sums for trauma or TPD, and topping up income protection beyond ACC limits.

It depends on the type of cover. For income protection, most NZ policies offset ACC payments to avoid over-insurance—you receive the difference between ACC and your insured benefit. For lump-sum covers like trauma, TPD, or life insurance, ACC doesn't prevent you from receiving your full insurance payout, as these serve different purposes (immediate lump sum vs ongoing injury support). Check your specific policy terms for details.

Most New Zealand policies remain active if you move overseas, but terms vary by insurer and destination. Some policies may exclude cover in high-risk countries, reduce benefits, or require notification. If you're already overseas when you apply, underwriting can be more complex. Frequent international travel is usually fine but should be disclosed. Always notify your insurer of permanent moves and confirm your cover remains valid in your new location.

Simple applications with no medical issues can be approved within a few days to a week. Applications requiring medical evidence, GP reports, or specialist assessments often take 2-6 weeks, depending on how quickly medical information is received. Complex health histories or overseas medical records can take longer. You're usually covered from the application date once approved, subject to the insurer's terms.

After you apply, the insurer reviews your health, lifestyle, and occupation information. They may request your GP records, arrange a medical exam, or ask follow-up questions. Once underwriting is complete, they'll offer terms—standard, with exclusions, with a premium loading, or occasionally decline. You can accept, negotiate, or decline the offer. Cover typically starts from your application date once you accept and pay the first premium.

You'll need to disclose your full medical history (past and current conditions, medications, treatments), lifestyle factors (smoking, alcohol, recreational drugs), occupation, income (for income protection), hazardous hobbies, family health history, and existing insurance. You'll also provide personal details and nominate beneficiaries for life cover. Full honesty is essential—non-disclosure can void claims. If you're unsure, we can talk it through and recommend the right cover for your situation.

To make a claim, notify your insurer as soon as possible and complete their claim forms. You'll need to provide medical evidence (GP reports, specialist letters, test results), proof of identity and ownership of the policy, and any other requested documentation. The insurer assesses the claim against the policy terms. If approved, lump-sum claims (life, trauma, TPD) are paid in full; income protection is paid periodically (usually monthly) after the waiting period.

Life insurance claims are often paid within 2-4 weeks once all documents are received, though complex cases can take longer. Trauma and TPD claims typically take 4-8 weeks as they require detailed medical evidence confirming the condition meets policy definitions. Income protection claims often begin within 2-4 weeks after the waiting period ends. Timeframes depend on medical complexity, completeness of documentation, and insurer processes.

For life insurance, the payout goes to your nominated beneficiaries or your estate if no beneficiary is named. For trauma, TPD, and income protection, the payout goes directly to you (the policy owner) as these are living benefits. You can update beneficiaries at any time by notifying your insurer. It's important to keep beneficiary details current, especially after major life changes like marriage, divorce, or the birth of children.

It depends on whether you selected stepped (rate-for-age) or level premiums. Stepped premiums increase each year with age, whereas level premiums stay fixed for a period (often until age 65 or 70) before switching to stepped. Additionally, if your policy is inflation-indexed, your sum insured and premiums increase annually with CPI. Insurers may also reprice policies periodically due to claims experience or changing risk factors, which can affect all policyholders. Always check the policy terms carefully.

Most insurers provide a grace period (usually 30 days) after a missed payment. If you pay within this period, your cover continues uninterrupted. If you don't pay, the policy will lapse and cover ends. Some policies allow reinstatement within a set timeframe (often 2-3 months) by paying overdue premiums and potentially providing updated health information. Once lapsed beyond the reinstatement period, you'll need to reapply, which may result in higher premiums or different terms based on your current age and health.

In New Zealand, personal insurance premiums (life, trauma, TPD, income protection, health) are generally not tax deductible for individuals. However, deductibility can apply in some business contexts—for example, policies held for revenue protection, key person insurance, or employee benefits may qualify depending on the policy structure and purpose. Tax treatment depends on your specific circumstances and IRD rules. You should check with the IRD or a tax professional for advice on your situation.