Like to keep your Insurance premiums as low as possible? While premiums usually increase with age, there are things you can actively do to reduce your premium costs – including choosing the right premium type.

Check out these three steps to be in control of your finances.

Building healthy long-term habits

Positive things like quitting cigarettes or reducing drinking can go a long way in keeping your premiums as low as possible.

Insurance premiums have ‘loadings’ when there are certain lifestyle risk factors present. For example, smokers automatically have a 100% loading, meaning premium costs (for the same level of cover and same age) are double what non-smokers’ are.

Even if you consider yourself more of a ‘social’ smoker, keep in mind that you are still considered a smoker for the purposes of calculating your premium. If you’d like to keep your health and bank account a break, consider kicking the habit completely.

Like smoking, excessive alcohol consumption can also cause some significant health issues, which means a loading may be added. If your level of regular drinking exceeds recommended weekly limits, an additional premium may be charged because of the higher risk of a future claim. By keeping your alcohol consumption within recommended limits, you may be able to reduce the costs of your premium.

Having a rainy-day fund

Have a good savings habit and your own emergency fund in place? Your savings could save you premium costs as well.

Premiums are based on the level of cover you need, and some covers also have an excess or a wait period before the cover starts being paid out. The longer the wait period and the higher the excess you select, the lower the premium. So if your rainy-day fund is enough to cover the excess or your living costs during your wait period, this can be a good way to save money.

Dangerous hobbies

Dangerous hobbies – or at least ones with a higher chance of causing injury or worse – are likely to attract a higher premium, if cover is accepted.

Perhaps you enjoy hang-gliding, scuba diving or the odd spot of rock climbing – and we are certainly not suggesting you should stop. But keep in mind that, if you want cover for potential loss caused by these activities, you will usually need to pay a higher premium for the higher risk. You can lower your premium by either giving up the hazardous activity or having cover for the activity excluded from your policy.

Choosing the right premium type

Usually, Insurance premiums increase with age, and that’s what we call ‘stepped premiums’ or ‘rate-for-age premiums’: the vast majority of Insurance policies in New Zealand fall into this category.

But there’s another premium type, which remains the same throughout the term of your policy: we are talking about ‘level premiums’.

Unlike stepped premiums, which are cheaper initially but get more and more expensive in the future, level premiums are consistent over time so you can avoid the additional cost later in life (when you’re more likely to claim). In other words, you may have the option to fix the cost and secure the long-term affordability of your cover.


Like to learn more about level premiums or want to discuss other ways to keep your premiums manageable? Please get in touch. You have got some control over your Insurance premiums, and by making key changes, you may be able to reduce costs.

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current development or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek advice from a financial adviser.