The short answer: most policies use stepped premiums that rise with your age, and many also increase your cover each year to keep up with inflation. Insurers can also reprice a whole product. None of this is a penalty. It's how most policies are built, but it means it's worth checking every few years.
1. Stepped premiums go up with your age
Most life insurance in New Zealand is sold on stepped premiums. Your premium is recalculated each year based on your age, because the chance of a claim rises as you get older.
The increases are small in your 20s and 30s, then speed up through your 40s and 50s. A policy that felt cheap when you took it out can cost several times as much 15 years later, with exactly the same cover.
2. Your cover increases with inflation
Many policies include an inflation adjustment. Each year, your sum insured goes up in line with inflation so your cover keeps its real value, and your premium goes up to match.
You can usually decline the increase. That keeps your premium lower, but your cover is worth a little less every year you do it.
3. The insurer changes its rates
Insurers can change premium rates for a whole product or group of customers, for example when claims costs rise. Most life policies in New Zealand are guaranteed renewable. That means the insurer can't cancel your policy or change its terms because your own health has changed since you took it out.
4. Fees, extras and loadings
- Policy fees: a flat monthly fee on top of your premiums. It can rise too.
- Extra benefits: options added at the start, or since, that you may no longer need.
- Loadings: if you were charged extra for smoking or a health condition when you applied, that loading generally stays with the policy until the insurer agrees to review it.
What you can do about it
- Check your cover still matches your life. If your mortgage is smaller, your kids are older or your income has changed, you may be paying for more cover than you need. Or you may need more.
- Look at level premiums for long-term cover. Level premiums cost more now but stay the same for a set period, so they can work out cheaper over 10 years or more.
- Remove extras you don't need. Your insurer or adviser can tell you what each part of your policy costs.
- Compare with other insurers. Prices for similar cover can vary between insurers. But a new policy means new health questions, so compare the cover, not just the price.
Don't cancel your current policy first. Keep it until any new cover has been accepted and you understand the differences.
Is your policy still worth what you pay?
Get a free 15-minute check with a licensed adviser. Sometimes the answer is: keep what you've got.
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