Why Has My Insurance Premium Gone Up; And Should I Cancel?

That renewal letter is on the bench. Or it's the email you've opened, closed, and opened again.

The number is bigger than last year. Sometimes a lot bigger. And the thought that follows is the one half the country is having: do we just cancel this?

Don't. Not first, and not because the page stung. Cancelling is easy. Getting the same cover back, at this age, with this health history, is the expensive bit.

Why the number jumped

Health cover is being dragged by medical inflation; surgery, specialists, diagnostics, medicines. Aon's 2025 Global Medical Trend Rates Report put New Zealand medical inflation at 14.5% in 2025, up from 7.4% the year before. AIA NZ's Alex Kühnast told Stuff that was one of the highest rates in Asia-Pacific, driven by new treatments, workforce shortages, servicing costs and a stretched public system.

Aon's later 2026 report then projected employee medical plan costs in New Zealand rising a further 18% in 2026, against a global average of 9.8%. That's an employer-plan figure. Still a clean signal of how fast private care is moving.

Insurers have been passing it through. Partners Life told advisers that underlying rates on its older Protection Plan private medical cover would rise 16.6% from 22 April 2026, then another 2.0% from 22 July. Those two rounds compound to about 18.9% in 91 days, before any extra increase that comes from being a year older. Journey Plan, its newer product, rose by much less over the same two rounds. That's market context, not a pitch for either product.

nib NZ has said claims inflation remains at historically high levels, with utilisation still elevated while public services are stretched.

Life, trauma, TPD and income protection rise for different reasons. Stepped premiums go up with age. If CPI indexing is on, the sum insured (and the premium) steps up each year too. And if the industry is paying more in claims, prices follow.

The Financial Services Council's March 2026 snapshot is the tension in one line. Annual life insurance premiums reached $3.31 billion, up 2.7% year on year, even as cover numbers kept falling across several key products. People are still paying. Fewer of them are holding as many covers.

What's actually in the letter

A renewal increase is rarely one number. It's usually a mix of:

• a base rate change (the insurer repricing the product)
• age (stepped premiums)
• CPI or automatic indexation of the sum insured
• extras, excesses or loadings
• and, for health, higher claims and utilisation across the book

That's why two people with "the same kind of policy" get very different letters. Hospital-level cover catching up with what specialists now charge looks identical, on the page, to extras you haven't claimed on in three years.

If that letter is sitting on the kitchen bench and you'd rather not guess, Book a free 15-minute consultation. Bring it. We'll go through it with you. Fifteen minutes, no charge, no obligation.

Cancel now, pay later

Fair enough that you want the premium off the household budget. Groceries, rates, fuel and the mortgage have all been competing for the same pay packet.

A new application is underwritten as you are now, not as you were when you first took the policy out. A back niggle, a specialist referral, a mental-health episode, a blood-pressure reading. Any of those can mean a loading, an exclusion, a reduced sum insured, or a decline. Pre-existing conditions get excluded on a new application more often than people expect.

If you're replacing cover, keep the old policy until the new one is in force, in writing. A gap of a few days is a gap in which a claim doesn't get paid. The cover you can hold now, even at a higher premium, can be harder to obtain later on the same terms. That's the bit that doesn't show up on the renewal page.

The levers that actually move the premium

A review beats a cancellation. Depending on the policy:

Trim the sum insured. Life and income cover sized for a larger mortgage, or a different income, can come down if those numbers have changed. The aim is cover you can keep.

Lift the excess, especially on health. Works if you're using insurance for the large, unexpected events rather than every scan.

Lengthen the income-protection wait. Moving from 4 weeks to 13 weeks cuts the premium because the insurer is on the hook later. Only makes sense if sick leave, savings or a cash buffer can cover the extra weeks.

Pause CPI indexing. Automatic increases keep cover in line with inflation, and they lift the premium. Pausing slows the rise. The trade-off is the sum insured may not keep pace with living costs.

Drop unused extras. Day-to-day extras, dental add-ons, specialist modules you never claim on. Hospital-level cover for the big events is usually the piece worth keeping.

Ask about a premium holiday. Some insurers offer a temporary holiday or suspension. Not always available, and it can affect claims during that period, so check the wording.

Restructure rather than replace. Switching insurers means a new application and new underwriting. That's a different decision from "this renewal is too high, so I'll stop paying".

If you're shopping around

Compare the definitions, exclusions and claims process, not just the premium. Keep the existing policy in force until any new cover is accepted and started. If a pre-existing condition would be excluded on a new policy, the "saving" disappears the first time you need to claim.

How we can help

The 15-minute chat for this is simple. Bring the renewal letter, paper or PDF. We'll unpack what's driving the increase, check whether the sum insured and extras still fit, and compare that against the market if it's worth doing. We handle the insurer from there. We stay for claims and reviews.

Advice on insurance is fee-free for you. We're paid commission by providers, and that's disclosed. If the policy you've already got is the right one, we'll tell you to keep it. That's happened. It's in a published testimonial, not a slogan.

Nationwide advisers, local feel. No obligation.

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Disclaimer

This article provides general information only and does not consider your personal circumstances, objectives, or financial situation. Whether keeping, adjusting or replacing insurance is appropriate depends on your individual circumstances, financial commitments and objectives.