Why You Should Never Cancel Health Insurance

Cash is tight for many Kiwi families, though here’s one expense you shouldn’t trim

When budgets are under pressure, it’s natural to look for ways to reduce costs. But cancelling your health insurance is one saving that can backfire badly.

Health insurance plays a vital role in your personal finances because it protects the most important asset you have: your health. While premiums may feel like an easy expense to trim, giving up cover can expose you to significant financial and personal risk later on.

Before we delve into the six reasons you should never cancel health cover, let's clarify a couple of things.

What is Health Insurance?

Health insurance helps cover the cost of medical care, including doctor visits, hospital stays, surgeries, specialist consultations, and prescription medicines. It allows you to access treatment without bearing the full cost yourself, often when you need it most.

What About ACC?

In New Zealand, the Accident Compensation Corporation (ACC) provides no-fault cover for injuries, whether they occur at work, at home, or during leisure activities. ACC is well regarded and covers treatment, rehabilitation, and recovery support for injuries.

However, ACC does not cover illnesses, age-related conditions, or wear and tear. This is where private health insurance becomes essential. Private policies can cover:

• Elective surgeries (such as hip or knee replacements)
• Specialist consultations
• Prescription medicines, including those not funded publicly
• Faster access to treatment and shorter waiting times
• Greater choice over specialists and treatment providers
• Services not typically available in the public system, such as osteopathy or acupuncture (depending on the policy)

1. Health Insurance is Different

Some types of insurance can become less relevant as you age. For example, life insurance is often most important when you have dependants or significant debt, such as a mortgage on your home. As children become financially independent and mortgages are paid down, the need for life cover may reduce, and premiums nearly-certainly rise with age.

Health insurance is different.

Healthcare needs and costs generally increase over time, not decrease. Maintaining private health cover throughout your life can provide access to a broader range of treatments and higher levels of care than relying solely on the public system.

2. Financial Protection

Medical treatment can be expensive.

In New Zealand, many procedures cost tens of thousands of dollars if paid for privately. Without health insurance, these costs must come directly out of your pocket and can quickly create serious financial strain.

Health insurance helps protect your savings and shields you from unexpected medical bills.

3. Peace of Mind

Knowing you’re covered brings peace of mind. Instead of worrying about how to fund treatment during a medical crisis, you can focus on recovery and your wellbeing.

4. Access to Quality Care

Private health insurance gives you more control over your healthcare. You can often choose your specialist, hospital, and timing of treatment. Some policies also include wellness benefits, preventative care, and discounts on medications.

These perks help you stay healthier over the long term.

5. Consequences

Cancelling your health insurance can make it difficult, and expensive, to get cover again later. If you get it at all.

If you cancel your policy then reapply in the future, you’ll need to go through the full process of underwriting again. This is a thorough process of evaluating your risk as someone to insure. Any new conditions developed while uninsured may be excluded, attract higher premiums, or even result in declined cover.

Related material:

• ‍‍Should you cancel an insurance policy to save money?
• Do I need life insurance when I retire?

6. Life is Unpredictable

Finally, life is unpredictable, and unexpected medical emergencies can happen at any time.

Even if you are young, healthy, and have never had any major medical issues, accidents and illnesses can happen to anyone. Health insurance is protection against the unknown.

The Bottom Line: Never Cancel Health Insurance

Health insurance provides financial protection, peace of mind, and access to timely, high-quality care. While premiums can feel burdensome, the cost of being uninsured can be far greater.

Think of health insurance as an investment in both your health and your financial security. It can spare you stress, delays, and financial hardship when life doesn’t go to plan.

If you’d like help reviewing your options or exploring ways to make your cover more affordable, one of our trained professionals would be happy to assist. We offer a free initial consultation to discuss your health insurance needs. Get in touch to book your complimentary chat, your future self might thank you for it.