Sometimes it can be hard to remember what Insurance is buying you. But if you’re thinking about cancelling your policy, here are five important things to consider.

What’s your Insurance covering – and why you originally got it

If you have Mortgage Protection Insurance, for example, the chances are that – when you took out the policy – you were concerned you might not be able to meet your mortgage repayments if your income stopped.

Is that concern still justified? If you were off work with a serious illness, how long could you make ends meet until you were back at work? And wouldn’t it be better for your recovery to not have to worry about making ends meet in the first place?

Paying premiums or putting money aside for emergencies?

If you’re pondering this question, it’s important to think about how long it would take you to save to pay for a relatively simple operation.

Don’t forget that even routine surgeries can cost thousands. If your Health Insurance premiums were $100 per month (excluding any interest or inflation adjustments), it would take you 100 months to save the money for a $10,000 surgery. And what would happen if you needed it sooner?

Publicly-funded ‘Insurance’ may not be enough for your needs

While there is “publicly” funded insurance of sorts available, through ACC or Work and Income New Zealand, the coverage these options offer might not meet your needs.

ACC will only pay replacement income (at a percentage of your current income) if you are off work due to injury, while if you have a partner, you may not even qualify for Work and Income New Zealand benefits. And even if you do qualify, the benefit rate is likely to be significantly lower than your current income. While publicly-funded Insurance definitely has its place, can it be your only backup?

Who else relies on you?

Is someone else relying on you to meet household living costs and debt repayments? If you are in a relationship, the other person may be able to meet the financial costs in the short term – but would this be possible for the long term?

Before cancelling any Insurances, make sure you work out your budget, and know exactly what income your household needs each month to keep functioning financially. If there is a shortfall in your budget based on just one income, or you couldn’t afford to replace lost or stolen items, then rearranging rather than cancelling your insurances may be a better option for you.

Is there anything you can do to reduce costs?

Can you reduce your Insurance costs by increasing your excess or extending a wait period, rather than cancelling the policy?

Often, when considering cancelling Insurance premiums, it is more a case of trying to save money, rather than not understanding the benefits of having Insurance cover. If you have (or can) put aside some money, creating an emergency fund, this could be used to help you reduce the costs of your Insurance, rather than not have it at all.
The benefits of having Insurance might not be evident in the here and now – after all, you are paying money into a ‘pool’ just in case you need it one day – but they might make all the difference if life takes an unexpected turn.


Do you have concerns about the cost of your Insurance, or whether it is covering the ‘right things’? Let’s have a chat: as your adviser, our job is all about helping you get good value for your money.

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