Question 1

What is the difference between excess and premium in health insurance?

Accepted Answer

The premium and excess are two distinct costs in health insurance. Your premium is the regular payment (monthly, quarterly, or annually) you make to maintain your insurance coverage, regardless of whether you make any claims. It's like a membership fee that keeps your policy active. The excess, also called a deductible, is the amount you pay out-of-pocket before your insurance starts covering costs when you make a claim. For example, if you have a $500 excess and your medical procedure costs $5,000, you pay the first $500 and your insurer covers the remaining $4,500. Generally, choosing a higher excess will lower your premium, as you're agreeing to shoulder more of the initial cost yourself. In New Zealand, typical excess amounts range from $250 to $2,500, and you can adjust this when setting up or renewing your policy to balance your monthly premiums with potential out-of-pocket costs.

Question 2

What are pre-existing conditions and how do they affect my health insurance coverage?

Accepted Answer

A pre-existing condition is any health issue, injury, illness, or medical condition that you had before your health insurance policy started. This includes conditions you were aware of, had symptoms for, received treatment for, or should have reasonably known about. Pre-existing conditions significantly affect your coverage because most New Zealand health insurers will either exclude these conditions from coverage permanently, impose extended waiting periods before covering them, or apply premium loadings (higher premiums). Common pre-existing conditions include diabetes, heart disease, cancer, mental health conditions, and chronic injuries. When applying for insurance, you'll need to disclose your full medical history during the underwriting process. If you don't disclose a pre-existing condition and later try to claim for it, your insurer may decline the claim or even void your entire policy. Some insurers offer moratorium underwriting, where pre-existing conditions may be covered after a symptom-free period of typically 2-5 years. It's crucial to be completely honest during application to avoid issues when making claims.

Question 3

How do waiting periods work in New Zealand health insurance?

Accepted Answer

Waiting periods are mandatory time frames after purchasing health insurance during which you cannot claim for certain types of treatment. These periods protect insurers from people buying coverage only when they know they need treatment. In New Zealand, there are typically three types of waiting periods. First, the general medical waiting period is usually 6 months and covers non-surgical consultations, diagnostic tests, and treatments. Second, the surgical waiting period is typically 12 months for most surgical procedures, though some insurers offer shorter periods for specific surgeries. Third, specific condition waiting periods of 12 months or longer apply to treatments like pregnancy-related care, cardiac procedures, and cancer treatment. Importantly, emergency treatment and accidents may be covered immediately or have shorter waiting periods. Once a waiting period expires, that coverage becomes active for the life of your policy, provided you maintain continuous coverage. Some insurers may waive or reduce waiting periods if you're switching from another health insurance policy with continuous coverage, though you'll need to provide proof of your previous insurance. Understanding these waiting periods is crucial for timing your insurance purchase appropriately.

Question 4

What does 'no-claim bonus' mean and how can it reduce my insurance costs?

Accepted Answer

A no-claim bonus, also called a claims-free discount, is a reward system where your health insurance premium is reduced if you don't make any claims during a policy year. This common feature in New Zealand health insurance incentivizes policyholders to use insurance only for significant medical expenses rather than smaller costs they could manage out-of-pocket. The typical no-claim bonus reduces your next year's premium by 10-20%, though some insurers offer bonuses up to 50% after several consecutive claim-free years. The bonus usually accumulates year by year, so you might get 10% off after one claim-free year, 20% after two years, and so on, up to a maximum. However, if you make even one claim, you'll lose some or all of your accumulated bonus, and your premium will return to the base rate or a lower bonus tier. When deciding whether to claim, consider whether the claim amount exceeds what you'd save from maintaining your no-claim bonus. For example, if your bonus saves you $300 annually and you have a $400 procedure, it might not be worth claiming. The no-claim bonus resets annually, so you have a fresh opportunity each policy year to maintain or rebuild your discount.

Question 5

What is the difference between in-network and out-of-network providers in health insurance?

Accepted Answer

In-network providers are healthcare professionals, specialists, and hospitals that have contractual agreements with your insurance company, while out-of-network providers do not have such agreements. This distinction significantly affects your costs and claim process. When you use in-network providers, you typically benefit from direct settlement (direct billing), where the provider bills your insurer directly and you only pay your excess. In-network providers have agreed to set fee structures with your insurer, so you're less likely to have unexpected out-of-pocket costs beyond your excess. With out-of-network providers, you usually pay the full cost upfront and then submit a claim for reimbursement. Your insurer may only reimburse up to a set amount or percentage, potentially leaving you with additional costs if the provider charges more than your policy's benefit limits. In New Zealand, major insurers like Southern Cross and nib have extensive networks of affiliated providers. When choosing health insurance, it's worth checking whether your preferred specialists and hospitals are in-network. However, most comprehensive policies will still provide some coverage for out-of-network providers, just with potentially more paperwork and possible higher out-of-pocket costs.

Question 6

What is medical underwriting and why does it matter when applying for health insurance?

Accepted Answer

Medical underwriting is the process where insurance companies assess your health status, medical history, and risk factors to determine whether to offer you coverage, at what price, and under what terms. When you apply for health insurance in New Zealand, you'll complete a detailed medical questionnaire covering your personal and family health history, current medications, lifestyle factors like smoking or alcohol use, occupation, and any existing health conditions. The insurer may also request your medical records from your GP or specialists, and in some cases, require a medical examination. Based on this assessment, the insurer will make one of several decisions: accept you at standard rates, accept you with premium loadings (higher premiums due to increased risk), accept you with specific exclusions (certain conditions won't be covered), or decline your application altogether. This process is crucial because it determines your long-term coverage and costs. Being dishonest during underwriting can result in declined claims or policy cancellation later. There are alternatives to full medical underwriting, such as moratorium underwriting, where you don't need to disclose your medical history upfront, but pre-existing conditions are automatically excluded for a set period. Understanding underwriting helps you prepare for the application process and choose the right time to apply for coverage, ideally when you're healthy and before any new health issues develop.

Question 7

What does annual limit mean and how does it affect my health insurance coverage?

Accepted Answer

An annual limit is the maximum total amount your health insurance will pay out for all your claims combined during a single policy year, which typically runs for 12 months from your policy start or renewal date. Once you reach this limit, you become responsible for paying 100% of any additional medical costs until your policy year resets. In New Zealand, annual limits vary widely depending on your policy level, typically ranging from $50,000 for basic policies to $500,000 or unlimited for comprehensive plans. It's important to understand that this limit applies to the cumulative total of all claims, not to each individual treatment. For example, if your policy has a $100,000 annual limit and you claim $40,000 for surgery in March and $70,000 for cancer treatment in September, you would exceed your limit and need to pay the additional $10,000 yourself. Some policies also have sub-limits for specific types of treatment, such as a $10,000 annual limit for specialist consultations or a $2,000 limit for physiotherapy, even if your overall policy limit is higher. When choosing a policy, consider your health status, age, and potential medical needs. While policies with higher annual limits cost more in premiums, they provide crucial protection against catastrophic medical expenses. If you have ongoing health conditions or anticipate major procedures, opting for a higher annual limit provides better financial protection and peace of mind.

Health Insurance Terminology Guide

Quick Reference Tips

Essential Terms

Annual Limit

Benefit

Claim

Coverage

Deductible / Excess

Exclusion

Policy & Coverage Terms

Co-payment

Direct Settlement

In-Network Provider

Out-of-Network

Policy Schedule

Premium

Pre-authorization

Pre-existing Condition

Waiting Periods & Conditions

General Medical Waiting Period

Surgical Waiting Period

Specific Condition Waiting Periods

No-Claim Bonus

Medical & Treatment Terms

Day Surgery

Diagnostic Procedures

Emergency Treatment

Inpatient

Outpatient

Specialist

Therapeutic Services

Prosthetics & Aids

New Zealand Specific Terms

ACC (Accident Compensation Corporation)

District Health Board (DHB)

Private Hospital

Public Hospital

Waiting List

Financial & Admin Terms

Actuarial Value

Grace Period

Lapse

Loading

Moratorium

Renewal

Underwriting

Waiver

Common Abbreviations

Still Need Help?

Ready to Find Your Perfect Plan?