Is Health Insurance Worth It in NZ? Understanding Your Options

A client once put it to us straight. “We pay taxes. The hospital is free. Why
on earth would I hand an insurer $200 a month on top of that?”
It’s the right question to ask, and a lot of people quietly answer it with “I
wouldn’t” and move on. Before you do, it’s worth knowing exactly what
you’re saying no to, because the gap private cover fills isn’t the one most
people picture.

The public system is better than people give it
credit for

Start with what works, because it’s a lot.

If you have a heart attack, get hit by a car, or need urgent cancer
treatment, the public system treats you. Quickly, and without a bill. For
genuine emergencies and life-threatening illness, the care in NZ is strong.
No private policy is going to beat an ambulance and an emergency theatre.
If the public system covered everything that well, health insurance would
be a waste of money. It doesn’t, and the gap sits in a very specific place.

The gap isn’t emergencies. It’s the wait.

The thing that catches people out is not the dramatic stuff. It’s the slow,
grinding, non-urgent stuff.

A knee that needs replacing. A gallbladder that has to come out. A hip
that’s gone. A heart procedure that matters but isn’t an emergency this
week. None of these will kill you tomorrow, so on the public list they sit
behind the things that will. The wait can run from six months to two years.
Some people get taken off the list entirely for being too low a priority.

That’s the first half of the gap. Here’s the second.

Newer medicines. Pharmac funds a limited subset of the medicines
available worldwide. A number of newer cancer treatments aren’t on the
list. If you wanted access to those, the cost can run into thousands of
dollars a month, out of your own pocket, unless you have cover that pays
for them.

So the real question isn’t “emergency or not.” The public system has
emergencies handled. The question is what you’d do about a year on a
waitlist in pain, or a drug that works but isn’t funded.

What private cover actually buys

A standard NZ health policy usually covers:

• Surgery in a private hospital
• Diagnostic tests like MRI, CT and ultrasound
• Specialist consultations
• Hospital costs
• Non-Pharmac medicines, on some policies, up to a cap
• Cancer treatments not funded publicly

Some policies add GP visits, dental, optical and physio, but the surgical
and specialist cover is the engine. The rest is trim.

The mistake that quietly costs the most

Money gets tight one year, the premium looks like an easy saving, so the
policy gets cancelled. Then at 55, with a niggle that’s started to worry
them, they go to pick it back up.

Here’s the catch. Insurers underwrite on your health at the time you apply.
Anything you’ve been diagnosed with in the gap usually comes back as an
exclusion. So the cover you can get at 55 often won’t cover the exact thing
you took it out for.

Holding cover through your life is almost always cheaper, and broader,
than letting it lapse and trying to restart later. The cheapest, widest cover
you’ll ever access is the one you can take out while you’re well.

Three honest questions

Whether it’s worth it for you comes down to three things.

• How would you feel about a 12-month wait for a hip
• replacement? If “fine, I’d manage” is the true answer, health cover is
• less urgent for you.
• Could your household absorb a $50,000 medical bill without
  it hurting? If not, this is mostly what health insurance is there for.
• Would you want non-Pharmac cancer drugs if it ever came to
  that? If yes, private cover is one of the few ways to get them.

If you read those and felt the answers go the other way, that’s your answer.
It’s less compelling if you’re young, healthy and at peace using the public
system for whatever turns up. It’s more compelling the moment a long
wait or an unfunded drug would change your life.

What to do next

If you want to see what cover would cost for your situation, we can run
quotes across the main NZ insurers and walk you through what’s actually
different between them, not just the price.
Book a chat and we’ll work through it.

This article is general information only. It does not take your personal situation into account
and is not financial advice. For advice specific to you, speak to a licensed financial adviser