5 Key Questions to Ask Before Choosing an Insurance Plan
Choosing insurance can feel overwhelming. With so many options and unfamiliar terms, it’s easy to feel lost. But if you ask the right questions from the beginning, the process becomes much clearer. Whether you’re looking at health, life, disability, or trauma insurance, the five questions below will help guide your decisions—without confusing financial terms or pressure to buy anything.
1. What does this plan actually cover—and what doesn’t it?
It sounds simple, but many people don’t fully understand what their insurance covers until they need to make a claim. For example, some trauma insurance plans cover conditions like cancer or heart attacks but might not include early-stage diagnoses. Health insurance might pay for private surgery but not day-to-day GP visits. Always ask for clear examples of what is included and what is excluded. If something seems vague, ask for it in writing. Every insurer must provide a Product Disclosure Statement (PDS) outlining this information.
2. Will this plan still work for me in five years?
Think about how your life might change. Are you planning to start a family? Thinking about moving overseas? Or maybe your job comes with new health risks? Good insurance should still be useful as your life changes. Some plans allow you to upgrade or change cover without needing a new medical check if your circumstances shift. This is something many people in New Zealand aren’t aware of until it’s too late. Make sure you’re not stuck with a plan that becomes less helpful as your life evolves.
3. How does the claims process work—and how long does it usually take?
You buy insurance for peace of mind. But that peace can quickly disappear if you face delays when you need help the most. Ask how the company handles claims. Who do you speak to? Is it someone in New Zealand, or an overseas call centre? How long does it usually take to receive a payout? According to a 2022 Financial Services Council report, around 88% of life insurance claims in NZ are accepted, but the process can still take weeks if documents are missing. Understanding how claims are handled can make a big difference when you’re already under stress.
4. What will this cost me now—and what could it cost me later?
Many insurance plans start off with lower premiums and then increase each year, especially for health and life insurance. This is called “rate for age” pricing. Others use level pricing, which stays the same over time but starts off higher. It’s important to know what you’re committing to—not just now, but in the future. Can you still afford it in ten years? In New Zealand, the cost difference between the two pricing structures can be significant over time. Think about what fits your long-term budget, not just what’s cheapest right now.
5. Who is giving me this advice—and are they really independent?
In New Zealand, anyone giving financial advice must either be a licensed Financial Advice Provider or work under one. This rule protects you from receiving poor or biased advice. You can check the Financial Markets Authority (FMA) website to see if your adviser is registered: https://www.fma.govt.nz. Also, ask how they get paid. Do they work with just one insurance company, or do they compare multiple providers? Are they paid commission or a salary? There’s nothing wrong with earning commission, but it’s helpful to know where the advice is coming from and whether it’s truly based on what’s best for you.
Insurance is about preparing for the unexpected. It’s not about fear—it’s about having support when life changes. By asking these five questions, you put yourself in a better position to make smart, confident decisions that suit your life in New Zealand today and in the future.
