Reviewing Your Health Insurance Plan in NZ (2026): When to Adjust, Switch or Keep It

With NZ health premiums climbing double digits, an annual review pays off. Here is how to check your excess, non-Pharmac drug caps and modules, and when switching is worth the pre-existing risk.

Health insurance is one of those policies many people set up once and never look at again. That was always a risk, but it matters more now that renewal premiums are climbing fast. A plan that was well-priced and well-specified a few years ago can quietly fall behind on the limits that count, while the premium keeps rising. An annual review is how you catch both problems before a claim does.

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.

TL;DR: NZ medical insurance costs were projected to rise about 17% in 2025, with a further 18% forecast for 2026.¹ That makes an annual review worth doing. Check your premium change, excess level, non-Pharmac drug cap and everyday modules — but weigh any switch carefully, because a new policy re-underwrites you and can exclude conditions you have now.⁷

When should you review your health insurance?

A yearly check, usually at renewal, is a sensible rhythm for most people. Renewal is when the premium change lands in writing, so it is the natural moment to ask whether the cover still fits.

The case for an annual review has strengthened because costs are moving quickly. Medical insurance costs in New Zealand were projected to rise about 17% in 2025, with medical inflation running at 14.5% that year and a further 18% increase forecast for 2026.¹ Consumer NZ's 2025 survey found the average policy premium rose by roughly NZ$100 a month between its 2023 and 2025 surveys.² Those are large, compounding increases, and they are driven by rising claims rather than insurer margin — industry insurance service expense, which is mostly claims, rose 18% to about NZ$2,406 million in 2023/24.⁴

About 35% of New Zealand adults hold private health insurance, so this affects roughly one in three people.³ A review does not always mean changing anything. Often the right outcome is to keep the plan as it is, having confirmed it still works. The point is to make that an informed decision rather than a default.

Has your plan kept pace with non-Pharmac drug and surgical limits?

This is the part of a health plan that ages the worst, and the part most worth checking.

Modern cancer treatment increasingly relies on drugs that Pharmac does not fund, where a single course can run to six figures. Non-Pharmac (unfunded) drug benefits vary widely between plans and have changed in recent years, so an older plan may be under-specified without you knowing. As a reference point, Southern Cross's standard Cancer Cover provides only about $8,000 to $10,000 per claims year for non-Pharmac, Medsafe-indicated chemotherapy drugs, while optional upgrades lift that limit to $100,000 (Chemotherapy 100) or $300,000 (Chemotherapy 300), covering both Pharmac and non-Pharmac drugs.⁶ Whether a claim is paid depends on the terms, conditions, exclusions, stand-down periods and underwriting of the specific policy, and on your disclosure. This is a summary only — always read the policy wording.

Southern Cross is a useful benchmark here because it pays over 68% of the value of all health insurance claims paid in New Zealand, which makes its policy document a common reference point when checking whether your own surgical and drug limits have kept pace.⁵ Other insurers, including nib and AIA, are paying out large and rising sums too — AIA New Zealand paid over NZ$177 million in health claims in 2025, up about 6% — which reflects how treatment costs are climbing across the market.⁸

When you review, two questions matter most:

• Non-Pharmac drug cover. Is there a base cap of a few thousand dollars, or have you taken (or got the option to take) an upgrade into the six figures?
• Surgical limits. Does your plan cap the cost of a major procedure below what private surgery now costs, or is it effectively comprehensive?

These limits are set in the policy document, not the marketing. If you are not sure where yours sit, that is exactly what an adviser review reads for you.

Is your excess still the right level?

Your excess is the amount you pay towards a claim before the insurer pays the rest. A higher excess lowers your premium; a lower excess costs more each month but reduces what you pay at claim time. There is no universally correct level — it depends on how much premium you want to save now versus how much you could comfortably cover if you claimed.

With premiums rising, raising the excess is one of the few levers that can offset an increase without cutting the cover that matters. Many people choose a higher excess to keep the plan affordable while protecting the high-value limits (surgery, cancer drugs) that are the real reason to hold cover. Others prefer a lower excess for predictability. The trade-off is yours to set deliberately rather than leave on whatever was chosen years ago.

We cover the mechanics in more detail in our guide to health insurance excess choices in NZ.

Are you paying for everyday modules you don't use?

Many health plans bundle optional "everyday" modules — GP visits, dental, optical, physiotherapy and similar. They are pitched as good value, and for some households they are. But they add premium, and they often pay out only small amounts capped each year.

The honest test is usage. If your dental and optical module reimburses a few hundred dollars a year and you claim less than the premium it adds, it may be costing you more than it returns. For some families with regular dental or optical needs, the same module genuinely pays its way. The point is to check your own claims history against the module's premium rather than assume.

This is where a review can find savings without touching the core cover. Trimming a low-use everyday module can fund part of a premium rise while leaving the surgical and non-Pharmac limits — the cover you actually hold the policy for — fully intact.

When is switching worth the pre-existing risk, and when isn't it?

This is the most important judgment in any health insurance review, and the easiest to get wrong.

The central trade-off is re-underwriting. Switching insurers means applying for a new policy, and a new policy underwrites you afresh. Any medical condition that arose while you were on your current policy can become a permanent exclusion on the new one.⁷ So a switch that looks attractive on premium can quietly strip cover for something you have developed in the meantime.

Source: adviser framework, 2026. This is general guidance, not a recommendation about your situation.

Switching is not off the table — sometimes a better-specified plan with no new exclusions is the right move. But it should follow a clear-eyed comparison, not a premium quote alone. Adjusting your existing plan (excess, modules, or an upgrade with your current insurer, who already accepts your conditions) is often the lower-risk way to deal with a renewal increase. An adviser can compare options across insurers and flag where a switch would cost you cover. We explain how that works in how advisers compare insurers in NZ.

How life events (kids, age, income) should change your cover

Cover that fit you five years ago may not fit the household you have now. A review is the moment to line the plan up with where life actually is.

• New children. Adding a child raises the question of which plan tier and whether obstetrics or newborn cover is included. The cheapest tier is not always the right starting point for a growing family.
• Getting older. Premiums rise with age, and the value of higher surgical and non-Pharmac limits tends to increase as the chance of needing them grows. This is often when people most regret an under-specified plan — and, separately, when re-underwriting a switch becomes riskier because conditions have accumulated.
• Income changes. A higher income can make a higher excess comfortable (lowering premium). A tighter budget may push the same way for affordability, or towards trimming everyday modules rather than core cover.

None of these mean a particular action is right for you — your circumstances will differ. They are simply the prompts that should trigger a closer look.

A simple annual health-cover review checklist

Run through these six items once a year, ideally when your renewal arrives.

Source: adviser framework, 2026.

The aim is not to change something every year. It is to confirm, on purpose, that your plan still fits — and to catch the gaps while you can still do something about them.

Frequently asked questions

How often should I review my health insurance in NZ? Once a year, usually at renewal, suits most people. Renewal is when the premium change is confirmed in writing, which makes it the natural point to check whether the excess, limits and modules still fit. With NZ medical costs projected to rise roughly 17% in 2025 and a further 18% forecast for 2026, a yearly look is increasingly worthwhile.¹

Should I switch health insurers to get a cheaper premium? Not on premium alone. Switching means a new policy that re-underwrites you, and any condition that arose while you were on your current policy can become a permanent exclusion on the new one.⁷ If you have developed health issues, adjusting your existing plan (excess or modules) is often lower-risk than switching. If you are healthy with no new conditions, a like-for-like comparison may be worthwhile.

What is non-Pharmac drug cover and why does it matter? Non-Pharmac drugs are medicines that Pharmac does not fund, including many modern cancer treatments where a course can cost well into six figures. Plans differ widely: a base cancer benefit may cover only around $8,000 to $10,000 a year of non-Pharmac chemotherapy, while upgrades can lift that to $100,000 or $300,000.⁶ Older plans may be under-specified, so this is worth checking at review.

Will raising my excess reduce my premium? Generally yes. A higher excess means you pay more towards a claim before the insurer contributes, in exchange for a lower premium. It can help offset a renewal increase while keeping the high-value limits intact. Whether it suits you depends on how much you could comfortably pay at claim time. Whether any claim is paid still depends on the policy terms, exclusions and your disclosure.

Are the everyday modules (dental, optical) worth keeping? It depends on your usage. These modules add premium and usually pay out small, capped amounts each year. If your claims are consistently less than the premium the module adds, it may be costing more than it returns. For households with regular dental or optical needs, the same module can pay its way. Check your own claims history rather than assume.

Can an adviser help me review my plan? Yes. An adviser can read your policy document, compare options across insurers on a like-for-like basis, and flag where switching would cost you cover through new exclusions. There's usually no direct charge to you — we're typically paid a commission by the provider, which doesn't change the premium you pay. We manage any conflicts of interest in line with our duty to prioritise your interests; full details are in our disclosure.

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. 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. 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), a free and independent dispute resolution scheme. Written by Henry Smith, Financial Adviser; reviewed by Craig Smith, Principal Adviser. Figures are correct as at 6 November 2025. Last reviewed 6 November 2025.