Insurance

If you’re looking to cut expenses, you may have considered reducing or cancelling your personal insurance.

It’s important to protect yourself financially so think hard before you make a change and take advice. Here are 5 things to consider:

1. Premium holidays let you temporarily stop payments to your insurer. But make sure you know what this actually means. For example, will you have to repay them later? And will you still be covered if you suffer a loss?
2. Cover suspensions mean your policy is temporarily put on hold. Ask your broker or insurer what will happen if you suffer from an unforeseen event or loss during the suspension period.
3. Explore your options on how to reduce your premiums – for example, increasing your excess, bundling policies if you’re with multiple insurers, or switching to another insurer.
4. Reinstating your insurance may have conditions attached, especially if your personal circumstances change during any suspension. For example, if a health problem arises you may need to declare it, which could affect your premiums.
5. Get everything in writing to help ensure there’s no dispute later on. Phoning may be quicker but it’s best to get what you’re told in writing. Ask for email confirmation of any changes made. Get this from your insurer, even if you’re using a broker. 

Life insurance is personal to you and your own circumstances. Think about the type and amount of cover you need, to prevent being over or under-insured.

Life insurance policies and premiums can vary greatly. Find out what you would and wouldn’t be covered for under each option. Also, look carefully at price. Policies that are cheaper initially can be more expensive long-term. Most premiums go up annually based on your age or inflation.

1. Policy definitions can differ between providers. It’s important to understand your insurance provider’s definitions of key policy terms such as ‘permanent disability’, ‘employment’ and serious medical conditions. A financial adviser can help you with this.
2. Be honest. If an insurer finds out you’ve lied, or you haven’t disclosed all your medical conditions or lifestyle choices they can change the terms of your cover or cancel benefits. Most insurers have very detailed questionnaires for you to complete but if you are unsure about specific conditions you need to disclose, ask your insurer or adviser to clarify.
3. Tell your family about the products you hold. If you have life or funeral cover, tell them so they can make a claim when you die.
4. Make sure you’re not doubling up on insurance. Are you already covered through another product?
5. Remember to revisit your policy regularly. Particularly if there’s a major change in your life – getting married, buying a house, the birth of children, changing profession, or paying off your mortgage.

Changing your policy or provider needs to be carefully worked through. You may gain some benefits (such as a reduced premium) but you need to make sure you won’t also lose some benefits. For example, you could have a claim denied that might have been accepted under your original policy. To avoid getting caught out, keep your old policy running until the new policy is in force. If your adviser is suggesting you switch to a new policy, make sure you understand what the benefits are for you. Check out our five tips below:

1. There may be differences in cover. For example, you may have a medical history of heart disease, but the new policy has less coronary cover.
2. Your new policy may require a new 'qualifying period'. You may lose the ability to claim for a period of time after you purchase your new policy.
3. Existing health problems may be excluded from your new policy as a 'pre-existing condition'. You could have a claim denied that may have been accepted under your original policy.
4. Premiums may change. You may pay for more insurance you don't need or may pay lower premiums in the short term but higher premiums in the long run.
5. A difference in your provider's financial stability, customer experience, service or claims processes. You may end up paying higher premiums or find it harder to make claims.

If you’re not happy with your provider or your adviser, you should contact them directly. If you’re not happy with how your complaint is dealt with, you can take it to their dispute resolution service.

Different companies provide different types of insurance so it’s a good idea to shop around to find a policy that best suits your particular needs and circumstances.

It’s also important to regularly review your insurance (for example every year). Insurance can be complex and our recent review of general insurance companies showed they sometimes make mistakes such as overcharging customers or not applying discounts.

We expect insurers to treat customers fairly, ensure their interests are properly considered and supply products that are fit for purpose.

If your insurer is a member of the Insurance Council of New Zealand (ICNZ) they are also required to adhere to the Fair Insurance Code which sets out their (and your) responsibilities when it comes to insurance agreements.

We encourage you to contact your insurer (or insurance adviser) to check the following.  We suggest asking for their response in writing:

1. How is my premium being calculated?
2. Are all the applicable discounts being included?
3. Is your product still the best one for me (especially if your policy is an older one or your circumstances have changed)
4. What are the available options and if I change, what are the implications?

These case studies were published in July 2021 as part of the FMA’s Insurance Conduct and Culture:  Fire and General Insurers Update.  The case studies and photographs are fictitious and for illustrative purposes only but are based on real examples identified in the FMA’s review.

Fred and Sylvia were charged double premiums

Fred and Sylvia, both in their 80s, arranged insurance with a broker many years ago and premiums were debited from their account every month. They didn’t pay too much attention as it all happened automatically. However, they later discovered that they had been double charged - paying their premiums twice a number of times due to a system fault. After complaining to their provider, they were eventually refunded around $800.

Luke and Sarah paid too much on their insurance policies

Luke and Sarah, both 36, stretched themselves financially to purchase their first home, a two-bedroom brick and tile unit in a suburb not too far from the city. Sarah arranged insurance for their new home with their bank and was told that if she purchased multiple policies (house, contents and motor vehicle) they would receive a multi-policy discount. The couple didn’t discover they were over-paying until several years later, when their insurer wrote to them to let them know the multi-policy discount had never been applied and they would be entitled to a refund.

Maddie and Kayleigh paid too much to insure their festival tickets

Best friends Maddie (20) and Kayleigh (22) were excited to attend a summer music festival. The tickets were quite a lot of money and Maddie bought them both on her credit card. She chose to get insurance in case anything came up that meant they couldn’t attend. Instead of paying a small percentage of the ticket price, she was charged a much higher flat fee due to IT problems with the website.

In July 2021, we published the results of a review of New Zealand’s home and contents and other general insurers. We asked them to take a good look at how they ran their businesses and if they were doing the right thing by their customers.

We found that insurers still have a lot of work to do to meet our expectations on conduct.

Download Insurance conduct and culture: Fire and general insurers update PDF

To find out more about insurance and how to make sure you are being treated fairly, check out the following sites:

Insurance and Financial Services Ombudsman

• Home and contents insurance – Tips and case studies

Sorted

• Insurance – Insuring the big costs if it goes wrong

• Asset protection - Ways to protect your valued assets

• House insurance – Insuring your home

Insurance Council of New Zealand

• Consumer guides to different types of insurance and information about disputes and calculations
• Your insurance health check
• Understanding insurance – your rights
• Insurance industry regulation – an overview

Consumer NZ

• Home and contents insurance

CRI insurance covers some or all of a customer’s outstanding credit card repayments in some circumstances, including bankruptcy, redundancy, injury, illness or death.

But many exclusions and prescriptive conditions are applied when claims are made, so customers may not receive the benefits they are expecting – and these benefits reduce significantly after age 65.

While there may be the occasional case where this kind of insurance is suitable, credit card issuers are no longer offering this CCRI insurance to new customers. It’s estimated that 200,000 New Zealanders already have CCRI insurance, spending up to $20 million a year on premiums.

We’re encouraging anyone who may have this kind of insurance to talk to their credit card provider or financial adviser to see if it’s still suitable.

Credit card repayment insurance is organised by whoever issued you the card – not Visa or Mastercard for instance, but a bank, insurer or other financial company.    When it was being sold, this kind of insurance often required just a quick check box to purchase – so you may not realise you still have it.

Check your next credit card statement or look online with your bank or credit card provider.  If you’re being charged for CCRI insurance then it should be clearly itemised out as a premium charge, not included  in with other interest payments.  But it will only show if you have a balance owing on the card. If you have CCRI insurance but no balance owing, then you won’t be getting charged any premium.

Most credit cards are issued by banks, but it’s not just them that sold CCRI insurance. Many of the customers with non-bank credit cards – such as from a retailer or finance company have also been sold CCRI insurance.

The cost of CCRI insurance depends on how high your credit card balance is – if you owe a lot on your credit card then you could be paying hundreds of dollars a year in CCRI insurance premiums.  Some providers put a cap on the premiums, but not all.  

Because it’s no longer being sold to new customers, your credit card provider might cancel the CCRI insurance at its next annual renewal.  They will tell you if they’re cancelling this insurance and seek your approval.

In this case no more premiums will be charged from this date and you’ll no longer have this kind of insurance. However, you may want to check with them directly to be sure, and so that you can stop paying straight away.

If you have confirmed there is a CCRI insurance policy on your credit card, talk to your credit card provider or financial adviser about whether it’s worthwhile continuing with it.  

The Citizens’ Advice Bureau has also written about CCRI