The excess (also called a deductible) is one of the most important decisions when choosing health insurance. Getting it right can save you thousands.
What is an Excess?
An excess is the amount you pay out-of-pocket before your insurance kicks in for a claim. For example, if your surgery costs $8,000 and you have a $500 excess, your insurer pays $7,500 and you pay $500.
Excess Options in NZ
NZ health insurers typically offer excesses ranging from $0 to $5,000:
- $0 excess: Highest premiums, no out-of-pocket cost when claiming - $250 excess: Popular entry level, moderate premiums - $500 excess: Most popular option — good balance of cost and protection - $1,000 excess: Significantly lower premiums, manageable out-of-pocket - $2,000+ excess: Lowest premiums, suitable for higher earners who want catastrophic cover only
How Excess Affects Premiums
Moving from a $250 to $1,000 excess typically reduces premiums by 25–35%. For a 45-year-old paying $150/month, this could mean saving $40–$50/month.
Per-Claim vs Per-Year Excess
Some policies have a per-claim excess (you pay the excess for each separate claim) while others have a per-year excess (once you've paid the excess in a year, all further claims are covered).
Per-year excess policies are generally more favourable if you're likely to make multiple claims in a year.
Which Excess Should You Choose?
Consider: - Your savings: Choose an excess you could comfortably pay from savings if needed - Your claim likelihood: If you have a high chance of claiming, lower excess makes sense - Your income: Higher-income earners can usually afford higher excesses - The maths: Calculate whether lower premiums over 5 years outweigh the potential higher excess costs