Insurance Loadings and Exclusions in NZ (2025): What They Mean and Can You Get Them Removed?

A loading raises your premium; an exclusion carves out a condition. Here is what each does to your cover, what commonly triggers them in NZ, when they can be reviewed, and how an adviser shops a non-standard offer across insurers.

When a New Zealand insurer assesses your application, the answer is not always a plain yes or no. Often it is yes, but on special terms — a higher premium, or a specific condition left out. Those two outcomes are a loading and an exclusion, and they are far more common than an outright decline. This guide explains what each one does to your cover, what commonly triggers them, whether they can be reviewed later, and how an adviser shops a non-standard offer to find better terms.

TL;DR: A loading is an extra charge on your premium for elevated risk — in NZ these commonly run from around +50% to +200% of the standard rate ¹. An exclusion instead removes cover for a named condition or activity, leaving the rest intact. Both can sometimes be reviewed after a stable, claim-free period (often around three years) ³, and because insurers underwrite differently, the same person can be offered very different terms by different insurers ⁴.

What is a premium loading and why has the insurer applied one?

A loading is an extra amount added to your premium because the insurer assesses your risk as higher than standard. Your cover is the same as anyone else's — the insurer is simply charging more to take on the risk.

Insurers sort applicants into risk classes. The healthiest applicants are offered a standard rate, and those with elevated medical, occupational or lifestyle risk are offered sub-standard, or loaded, terms ⁸. The loading is usually expressed as a percentage on top of the standard premium. In New Zealand, adviser and insurer materials commonly describe loadings in the range of about +50% to +200%, set case by case in underwriting rather than from a fixed published table ¹. A +50% loading on a $40 monthly premium, for example, makes it $60.

The point of a loading is that it lets the insurer say yes rather than no. Charging more for added risk is how an insurer offers cover to someone it would otherwise decline. For many people a loaded policy is still well worth holding, because the alternative is no cover at all. The trade-off is cost: you pay more, sometimes considerably more, for the same protection. Whether any future claim is paid still depends on the terms, conditions, exclusions, stand-down periods and underwriting of the specific policy, and on your disclosure — this is a summary only, so always read the policy wording or product disclosure statement.

What is an exclusion and how is it different from a loading?

An exclusion does not touch your premium. Instead, it removes cover for a specific condition, body part or activity, while leaving everything else covered.

If you have a history of, say, a knee injury, an insurer might issue cover that excludes claims relating to that knee. You pay the standard premium, and the policy responds normally to everything else — it just will not pay a claim arising from the excluded knee. That is the core difference: a loading changes what you pay, an exclusion changes what you are covered for.

On health insurance, pre-existing conditions are commonly handled in one of three ways — excluded outright, covered with a premium loading, or covered after an initial moratorium (a stand-down period during which claims for that condition are not paid, after which cover may begin if the condition has stayed clear) ². Which one applies depends on the insurer and the condition. An exclusion is not the same as a decline. Plenty of people hold genuinely valuable cover with one condition carved out and everything else fully protected. We go deeper on these choices in our guide to pre-existing conditions and your insurance options.

Here is how the two compare side by side.

Source: NZ insurer underwriting guides and adviser materials ¹²³⁷⁸. Treatment varies by insurer and condition.

What conditions and activities commonly trigger loadings or exclusions in NZ?

Underwriters price the detail and the combination, not just the diagnosis. A single, well-managed factor is treated very differently from several stacked together. That said, some triggers come up regularly in New Zealand underwriting.

Medical factors that are commonly assessed for a loading or exclusion include high blood pressure, high cholesterol, diabetes, cardiovascular conditions, arthritis, a mental health history, and nicotine or recreational drug use ⁸. Elevated body mass index (BMI) is another frequent one, and BMI-related loadings are among those most often reduced later if weight loss is sustained ³.

Lifestyle and occupation matter too. Smoking and nicotine use, and a high BMI, are common triggers for loadings ⁷. Higher-risk occupations such as construction, fishing and forestry can attract loadings or exclusions, particularly on disability and income-related benefits, while some lower-risk professional occupations may instead attract small discounts ⁷. Hazardous pastimes — for example certain forms of diving, aviation or motorsport — are more often handled with an activity exclusion than a loading.

The same factor can produce a loading from one insurer and an exclusion from another, because each insurer applies its own underwriting criteria. That difference is exactly why where you apply matters, which we come to below.

Can a loading or exclusion be removed or reviewed later?

Often, yes — but it is not automatic, and it is not guaranteed. Special terms reflect the risk as the insurer saw it on the day you applied. If that risk genuinely reduces, there can be grounds to ask for a review.

Where a policy allows it, insurers may reconsider a loading or exclusion after a stable, claim-free period. NZ insurer and adviser materials describe review windows of roughly two to five years, with around three claim-free years a common reference point, provided the condition has remained stable ³. BMI and weight loadings are a clear example: a loading applied for a high BMI can often be reviewed when weight loss is sustained and blood test results are within the normal range ³.

A few practical points are worth knowing:

• You usually have to ask. Insurers rarely volunteer a review — the request typically comes from you or your adviser, supported by up-to-date medical evidence.
• Evidence carries the case. A review needs current information, such as recent readings or specialist reports, showing the condition has stabilised or improved.
• The window varies. Two to five years is the general range; the exact timing depends on the insurer and the condition ³.
• It is a reassessment, not a right. The insurer underwrites the request fresh, so a review can confirm the existing terms, improve them, or occasionally find new information — it is not a guaranteed reduction.

Because timing and appetite differ between insurers, a review that one insurer declines may succeed elsewhere — which is one reason it can pay to look beyond the insurer that first issued the offer.

Does it pay to apply to more than one insurer?

It often does. Because New Zealand insurers underwrite differently, the same applicant can receive materially different terms — standard acceptance, an exclusion, a loading, a deferral, or a decline — from different insurers ⁴. One insurer's loading can be another's clean acceptance.

There is a practical limit, though. New Zealand's life insurance market is not large — 2025 industry analysis counts about 31 businesses in the life insurance industry ⁶ — so in reality you have a handful of full-underwriting insurers to shop a loaded or excluded offer across, not dozens. The larger players include AIA, Resolution Life and Fidelity Life ⁶. That makes placement a matter of judgement rather than simply firing off applications everywhere.

A word of caution on doing this yourself. Lodging multiple formal applications can leave a trail of declines or special-terms decisions on your record, which later insurers can ask about. The better approach is usually a pre-assessment — an informal, no-names enquiry that tests likely terms before any formal application is lodged. That is a large part of what an adviser does, and we explain the broader assessment in our guide to how life insurance underwriting works in NZ.

How do loadings affect level vs stepped premiums over time?

A loading is a percentage on top of your base premium, so its effect depends on how that base premium behaves over the life of the policy.

With stepped premiums, the price rises as you age, typically each year. A percentage loading rides on top of that rising base, so the dollar cost of the loading grows over time as the underlying premium grows. Early on it is modest in dollar terms; later on, the same percentage can represent a much larger amount.

With level premiums, the price is set to stay more stable over a chosen term, usually costing more than stepped at the start and less in later years. A loading on a level premium is built into a higher, steadier figure from the outset.

This is one reason a loaded offer is worth reviewing rather than simply accepting. If the loading can later be removed — for example after sustained weight loss — the saving compounds differently depending on which premium structure you hold. The right structure depends on your age, budget and how long you expect to need the cover, and that is a personalised decision rather than a one-size answer. Whether a claim is ultimately paid still depends on the policy terms and your disclosure.

How does an adviser challenge or shop a non-standard offer?

When an offer comes back loaded or excluded, an adviser's job is to test whether that is genuinely the best available term, not just accept it. In practice that work runs along these lines:

1. Read the reasoning. Understand exactly why the loading or exclusion was applied, and against which benefit — it may apply to one part of the cover, not all of it.

2. Pre-assess elsewhere. Use informal, no-names enquiries to test likely terms with other insurers before lodging anything formal, so early declines don't pile up on your record ⁴.

3. Strengthen the evidence. Supply current medical information — recent readings, specialist letters, stable results — that may shift an underwriter's view.

4. Place with the right insurer. Because appetite varies across the market's roughly 31 providers ⁶, the application goes to the insurer most likely to offer acceptable terms for your profile.

5. Diarise a review. Note when the offer may be revisitable — often after about three claim-free years ³ — and prompt the reassessment when the time comes.

There is a regulatory backdrop to this too. From 31 March 2025, insurers (including life and health insurers) must hold a Financial Markets Conduct (financial institution) licence from the FMA to keep providing relevant services to consumers, on top of their prudential licensing ⁵. That conduct framework underpins the standards an adviser can hold an insurer to when challenging a non-standard offer. We set out the comparison process more fully in how advisers compare insurers in NZ.

A note on how we work: we deal with a panel of selected insurers, listed in our disclosure, rather than every provider in the market. We're generally paid by commission from the insurer when you take out a policy through us; this doesn't change the premium you pay, and we manage any conflicts of interest in line with our duty to prioritise your interests — full details are in our disclosure.

Frequently asked questions

What is a typical premium loading in New Zealand?

NZ adviser and insurer materials commonly describe loadings in the range of about +50% to +200% of the standard premium, set case by case in underwriting rather than from a fixed published table ¹. The exact figure depends on the condition, the combination of factors, and the insurer. Some impaired-risk cases are handled with a condition exclusion or a moratorium instead of a loading ¹².

Can a loading or exclusion be removed later?

Often, but not automatically. Where the policy allows, insurers may reconsider a loading or exclusion after a stable, claim-free period — NZ materials describe windows of roughly two to five years, with around three claim-free years a common reference point — provided the condition has stayed stable ³. BMI and weight loadings in particular can often be reviewed when weight loss is sustained and blood results are normal ³. You usually need to request the review and supply current evidence.

Is an exclusion better or worse than a loading?

They do different things, so neither is simply better. A loading keeps full cover but costs more; an exclusion keeps the standard premium but removes cover for one named condition or activity ¹². Which is preferable depends on the condition excluded, how likely you are to claim on it, and your budget. An adviser can weigh both offers against your circumstances.

Will applying to several insurers hurt my chances?

Lodging multiple formal applications can leave a record of declines or special-terms decisions that later insurers may ask about. The safer approach is a pre-assessment — an informal, no-names enquiry that tests likely terms before any formal application — because insurers underwrite differently and the same person can receive very different offers ⁴. With only about 31 life insurers in the market ⁶, careful placement matters more than volume.

Does ACC cover the gaps a loading or exclusion leaves?

No. ACC covers injury, generally not illness, and it does not respond to the specific conditions a life, trauma or health policy is designed to cover. A medical exclusion on a private policy is not filled by ACC. Personalised advice can help you understand where your overall cover has gaps.

This article is general information only and is not personalised financial advice. It does not take into account your particular financial situation, goals or needs. Before acting, consider whether it's right for you and seek advice tailored to your circumstances. Whether a claim is paid depends on the terms, conditions, exclusions, stand-down periods and underwriting of the specific policy, and on your disclosure — always read the policy wording or product disclosure statement. Craig Smith Business Services Ltd (FSP712931), trading as Smiths Financial, holds a Class 2 licence issued by the Financial Markets Authority to provide financial advice on personal risk insurance, health insurance, general insurance, KiwiSaver and managed funds, and is a member of the Financial Dispute Resolution Service (FDRS). Written by Henry Smith, Financial Adviser; reviewed by Craig Smith, Principal Adviser. Last reviewed 15 August 2025.