I have been discussing managing medical premiums for quite some time. This article I wrote in 2016 is the start where I discuss the life cycle of medical insurance for the typical household. This discussion and approach is still quite valid.

However, with Covid, challenges with the public medical system and cost of living pressures, medical insurance remains an essential tool to ensure you have access to the medical care you need, but it's a whole lot more expensive than it used to be.

I provided an update to the original 2016 article in 2023 and again in 2024, with increased pressure on premiums starting to bite, 2024 was the start of the rough ride on medical premium hikes.

However, with 2025 kicking off with 4 out of 5 insurers announcing premium increases, 2025 is going to be rough. The range of premium increases from these 4 insurers are 16 - 22%.

That's not just your increase; it's the underlying premium rates. Your actual increase with your renewal will have an age-related component, too. The younger age group is 1-2% for being a year older and 5-10% for those middle-aged and older. It might not sound like a big deal but compound that over your lifetime, and you get $40 monthly premiums in your teens that become $700 per month by age 70.

That might scare you a bit, and what you don't know about the public health system means that you're probably over-reliant on the expectation it will provide.

This link for Public Health services delivery response is an interesting one. It stopped being updated when the election rolled around in 2023, and it's since restarted. However, suddenly, what was red isn't, which makes things look better than they actually are.

How might they have achieved this:

• Plain old increased barriers to accessing care.
• Pressure on GPs to manage conditions at the GP level means that there are fewer referrals to public specialists. Our clients are telling us that wait times for specialists are long, and it's taking some effort to get GPs to refer publically.
• Medical insurance is not a problem; GPs happily refer patients privately for treatment. You get the care you need, and they remove some of their ongoing management workload trying to game the public system to look after people.

My continued message is you need Medical Insurance and to regularly review your cover to your changing needs

The reality is that the type and structure of your medical policy throughout your life will change because different stages require different approaches.

When you're looking at medical insurance, you're often basing decisions on this policy remaining in place untouched and unchanged for 40-plus years; it's blatantly unrealistic. But people decide on and operate their policies in this way.

The point of this update is to raise the flag that restructuring medical cover that is getting expensive is possible, and a reduced, affordable level of coverage is far better than throwing it all away.

What will surprise you is I can provide coverage for a 75-year-old couple with a similar premium to a 30-year-old couple with kids. It is a matter of structure and alignment with available resources, but it is possible.

Let's get started:

The chart below outlines what I'm going to step you through. As you can see, it remains pretty tight until around 50, then it spreads, and once you approach retirement, it gets a bit squiggly. Interestingly when compared to 2016, there was significantly more variation in premiums between 25 and 50.

The clear message here is that while UltraCare is beneficial in many ways, especially for pre-existing condition qualification, you want to consider moving to Wellbeing plans as soon as possible; this is specifically one point where you need to talk to us, as we can restructure this cover and preserve your pre-existing condition coverage.

• Also, UltraCare is the only product used here that includes GP and prescription costs, so it is expected to be more expensive than the average. However, the premium increase after age 55 is astoundingly dramatic, and anyone over age 55 with it needs to seek advice now!

This is the picture from May 2023

This is the picture 12 months later in May 2024

And this is the picture from July 2024.

 

7 months later, the picture is quite different.

If premiums keep climbing like this, I'm going to have to adjust the scale on all these charts!

_{The premium is accurate at the time of publishing, based on standard premium rates, and subject to a medical assessment. Some providers have additional plans available; the most equivalent plans have been used for comparison purposes. The Southern Cross premiums illustrated do not have the unfunded medicines option added and are an additional premium to this illustration.}

Please refer to my prior article for the life cycle story these charts discuss:

• This is the link from the 2024 update,

The graph below covers the same information as above, giving a better view of what each provider is doing at a particular age.

This is the picture from May 2023

This is the picture 12 months later, in May 2024

And this is the picture from July 2024.

and the February 2025 picture.

_{Premium is accurate at the time of publishing, based on standard premium rates and subject to a medical assessment. Some providers have additional plans available; the most equivalent plans have been used for comparison purposes. The Southern Cross premiums illustrated do not have the unfunded medicines option added and are an additional premium to this illustration.}

Summary:

Looking across all providers and all ages for this sort of typical scenario, the average premium is $567 per month, including UltraCare and $485 per month without UltraCare in the mix. Some providers will be consistently positioned, and some will be across the spectrum as age and policy structure have a bigger impact than with other providers.

The average cost of coverage has moved significantly in the last ten years. At the same time, average earnings have increased, and people have adapted to increased costs of living.

• This is an outline of a typical medical insurance strategy and one that plays out every day.
• This isn't my advice at work; these are the decisions clients make once they have the information to make an informed decision, decisions that affect them.
• Being able to discuss the options means you retain valuable benefits that you may have otherwise cancelled because you saw no other option.

I’ve seen people with very few claims and others who have had multiple claims and had thousands paid.

• For example, a couple of knees and a bypass, $85,000 within three years,
• and cancer surgery and treatment, $180,000.

Sometimes, it's nothing for years and years, then bang, it's a run of significant claims. Other times, it is a consistent run of more minor things, but they add up in the same way.

• One client in the last 3-4 years has had $6,200 in specialist treatments
• and another nearly $20,000 in claims for head injury treatment in addition to what ACC funds.
• Another $76,000 for four weeks of cancer treatment, some of that unfunded.
• The largest claim we have had that's not unfunded medicines is $265,000 for multiple surgeries for cancer in a femur. That client now has a bionic leg from hip to below the knee.
• With around 300 claims per year coming to us, we're seeing the reality of the medical system.

Everyone is different; at the same time we have simpler medical challenges, and it should be unsurprising that we have a limited time here too.

When we get down to it these are not small numbers, and most New Zealand families would be hard-pressed to fund them. Your average medical policy provides $600,000 to $1,000,000 of coverage per person per year. The majority of people get nowhere near that in one year, let alone a lifetime, but it’s there if it’s needed. (Ignoring the couple of insurers that don't limit their surgery benefits)

If you take cover at 30, when most people start looking for coverage, for you and your family and hold it until age 75, as I’ve outlined, on the average premium across all providers (including UltraCare), you’ll pay about $306,649 in premiums, which is a large chunk of money. Remember, this has been over 45 years, and that’s a long time to try to save this. Without UltraCare, that average premium is $262,052. Since 2016, the average has increased by about $40,000 in total.

If you and your family have $10,000 of claims every year, which is probably unlikely but possible, you’ll have an insurance return of $450,000 straight off. If we look at average incomes over this time, it equates to around 5% of average gross income.

• Imagine what our health system would look like if it had 5% extra funding from a direct tax. I probably wouldn't be having this chat with you, and I'd be talking about something else.
• Unfortunately, it's not going to change in a hurry; medical insurance is a significant need in society.

If you take the cheapest option of this group, which is a good policy, then you’ll be about $75,847 better off than the average. If you take the most expensive plan (UltraCare), then you’re going to be about $222,986 worse off than the average.

If we consider the spread on the plans excluding UltraCare, your range is $60,281 more than average to $31,250 less than average.

Interestingly, the Southern Cross Wellbeing Two plan in the middle of the pack has the fewest resources available to cover you in the future, so cheaper isn't always ideal. The cheapest plan on average is Partners Life with Accuro very close to this, and both are some of the best cover on the market.

In terms of product quality, what the rating houses Quotemonster and Strategy Financial Services say, with my overlay opinion on what this translates to the order of quality is as follows.

1. Partners Life & nib (largely equally as good, and the nuances will be down to personal preference).
2. Accuro (because it is a good product, but it is not guaranteed, and they have been sold to UniMed.
3. AIA solid coverage and caters to unfunded cancer medicines, whereas the ones above also cater to non-cancer unfunded medicines as well.
4. Southern Cross, though the discussion on cover security with their penchant for changing benefits and general lack of unfunded medicines support need considering.
5. UniMed, which I have not included in the above, though with the Accuro purchase, that will change. Historically, these policies have been well behind the rest, though recent changes have improved their product rating.

Premium pressures and new products:

Insurers have been seeing the impact on people, with continuing rises in premiums and premature cancellations or reductions in coverage.

• This has opened the door to new benefits that are cut-down forms of some of the full-spectrum products, including coverage focused exclusively on cancer care or the big 5-6 conditions like hips, hearts, cancer, knees, and stroke.
• Sovereign's Key Health product, delivered back in 2005, I think it was, and since discontinued, was ahead of its time; this sort of product today has some merit for those looking for a budget option for their medical insurance.
  • A balance of either using public health or paying your own way privately for minor conditions but having the support of insurance for the really big stuff.
• AIA have come to market with a cancer care plan that caters only to cancer treatment.

One issue that has come to light since July 2024 is how insurers are treating unfunded medicine claims; where the common understanding has been MedSafe approved, there are additional criteria with MedSafe approvals that need consideration in relation to how your insurer may or may not pay an unfunded medicines claim.

• This is a complex area I will write more about, in the meantime this article I wrote for both clinical services and the financial services industry is worth a read

I expect that we will continue to see an evolution of cover in this space as insurers juggle things to provide more strata to the present medical insurance structures.

Is Medical Insurance worth it? Definitely!

Have a chat with us about how you can do this cost-effectively so that you get the best treatment options available for your premium money and that they’re affordable for you and your family in the future.