Written by Henry Smith · Reviewed by Smiths Insurance & KiwiSaver — licensed Financial Advice Provider (FSP712931) · Last updated 2026-08-19

Health Insurance Excess NZ: The Break-Even, Priced

Moving a joint hospital policy for two 40-year-old non-smokers from a nil excess to a $1,000 excess saves $636 a year with Southern Cross and $1,571.13 with nib, on quotes obtained and published by MoneyHub NZ (retrieved 19 August 2026). With nib the saving is larger than the excess itself, so the higher excess wins even in a year you claim. With Southern Cross it takes 1.57 claim-free years to break even.

That is the decision, and almost nobody quantifies it. Every New Zealand guide tells you a higher excess means a lower premium. Very few tell you how much lower, and none of the ones we could find divides one by the other. This page does.

Our companion guide explains how a health insurance excess works, including the mechanics and the wording. Read that first if the concept is new. This page is the arithmetic on top of it.

What Does Each Excess Level Actually Save?

Five insurers, one profile, three excess levels. The profile is a joint policy covering a 40-year-old man and a 40-year-old woman, both non-smokers, quoted for a nil excess, a $500 excess and a $1,000 excess.

Annual policy cost for a joint policy covering a 40-year-old male and a 40-year-old female, both non-smokers, quoted and published by MoneyHub NZ (retrieved 19 August 2026). Published illustration only, not a quote.

The saving percentages we calculate from those figures match the ones MoneyHub states on its own page, between 24% and 38%, which is a useful check that we have read the table the way it was meant to be read (MoneyHub NZ, retrieved 19 August 2026).

The finding is that the excess discount is not a fixed market rate. It ranges from 24% to 39% for exactly the same step, and it is largest at the insurers whose nil-excess price is highest. Southern Cross starts cheapest on this profile and gives away the least for taking risk back; nib and Partners Life start dearest and give away the most. The result is that the choice of excess reorders the market. At a nil excess, Southern Cross is $1,750 a year cheaper than nib. At a $1,000 excess, it is $815 cheaper. Half the gap is bought back by the excess alone.

How Many Claim-Free Years Does a Higher Excess Need?

Divide the excess by the annual premium saved and you get the number of claim-free years it takes for that step to pay for itself. Below 1.0, the saving covers the excess inside a single year, which means the higher excess is ahead even if you claim every year.

QuoteHub calculation, dividing the excess by the annual premium saved. Premiums as quoted and published by MoneyHub NZ for a joint policy covering two 40-year-old non-smokers (retrieved 19 August 2026). Published illustration only, not a quote.

Two things fall out of this, and both are uncomfortable for the standard advice.

At three of the five insurers, the $1,000 excess is ahead within a single year. On the published quotes, nib, AIA and Partners Life each take more than $1,000 off the yearly cost in exchange for the $1,000 excess (MoneyHub NZ, retrieved 19 August 2026), so on this profile you would have to claim more than once a year, every year, for the nil excess to win. The usual guidance to "choose a high excess only if you rarely claim" simply does not describe those three products.

The second $500 of excess is worse value than the first at every insurer. On the same published quotes (MoneyHub NZ, retrieved 19 August 2026), buying the first $500 of excess earns between $360 and $1,154.67 a year, while buying the second $500 earns only $276 to $538.09. At Partners Life the second step is worth just 33% of the first; even at Southern Cross, where the pattern is weakest, it is 77%. If you are going to take an excess at all, the first step is the one that pays.

The Mechanic Almost Every Guide Gets Wrong

Most New Zealand explainers, including older parts of our own, model the excess as a per-claim charge and then ask how many claims a year you expect. On the two largest health insurers, that model is wrong.

Southern Cross states it plainly in its own excess factsheet for the Wellbeing plans: "The excess applies to each person covered under the policy once each claims year." Once the excess has been paid for a person in a claims year, it is not charged again for that person until the next claims year (Southern Cross, Excesses for Wellbeing One and Wellbeing Two plans, retrieved 19 August 2026). nib's published pricing note describes its own default as "a $250 annual excess on Hospital cover" (nib NZ, compare plans, retrieved 19 August 2026).

The second point is bigger. On a Southern Cross Wellbeing plan the excess applies only to the surgical procedures benefit, the chemotherapy for cancer benefit including the Cancer Cover Plus options, and the radiotherapy benefit. It does not apply to any other benefit (Southern Cross excess factsheet, retrieved 19 August 2026).

Read that again, because it changes the question. Specialist consultations, diagnostic imaging and every day-to-day benefit on that plan are paid without the excess being touched. The right question is not "how often will I claim". It is "how often will I have surgery, chemotherapy or radiotherapy". For most people under 50 the honest answer is: rarely, and probably not in a given year.

That single mechanic is why the break-even numbers above are so favourable to a higher excess, and it is the part of the decision that the market has left almost entirely unexplained.

Which Excess Levels Can You Actually Choose?

Not the ones most articles list. The levels available depend on the insurer and the plan, and on the largest health insurer in the country a nil excess is not on the menu at all.

Southern Cross Wellbeing One and Wellbeing Two offer excess options of $500, $1,000, $2,000 and $4,000 (Southern Cross excess factsheet, retrieved 19 August 2026). There is no $0 option and no $250 option on those plans. nib's hospital plans use a flexible excess, and nib's own published example price is quoted on a $250 annual excess (nib NZ, compare plans, retrieved 19 August 2026).

Two limits are worth naming here rather than glossing over. No New Zealand insurer publishes a price for the $2,000 or $4,000 excess step, so we cannot chart it and we have not estimated it. And Southern Cross's own factsheet warns that adding, removing or changing an excess level may affect the level of cover, which is a reason to have the change advised rather than done online (Southern Cross excess factsheet, retrieved 19 August 2026).

Who Should Take a High Excess, and Who Should Not

A higher excess suits you if you can produce the excess amount in cash at short notice without borrowing, if your plan charges the excess annually rather than per claim, and if your realistic use of the surgical, chemotherapy and radiotherapy benefits is occasional rather than annual. On the numbers above, that describes most healthy people in their thirties and forties.

It does not suit you if the excess amount would go on a credit card, if you have a known condition likely to need surgery inside the next year or two, or if the excess would make you hesitate before claiming. An excess you are reluctant to pay converts insurance into an expensive habit. It also does not suit a household that would face two excesses at once, because on a joint policy the excess applies per person: if both people on the policy have a surgical claim in the same year, the exposure is double and every break-even figure above doubles with it.

There is one more case where the answer is simply "raise it". As premiums climb through your sixties, raising the excess is the lever that keeps catastrophic cover in force when the nil-excess price no longer fits the budget. Consumer NZ makes the same point in its buying guide, recommending an increased excess as the way to stay insured for a major operation as prices rise (Consumer NZ health insurance buying guide, retrieved 19 August 2026). Dropping cover entirely at 65 and rejoining later is not a realistic option, because underwriting starts again.

Honest Limits of This Analysis

The break-even figures on this page are arithmetic on published quotes, not a forecast and not a quote. Five limits apply.

The quotes are for one profile only: a joint policy for two 40-year-olds. A single 30-year-old or a 60-year-old couple will see a different discount curve, and we have not seen those published. The five plans are not identical products, so part of the price difference between insurers is cover, not excess. The excess is charged per person, so a two-person policy carries two potential excess payments in a year. The break-even calculation ignores the time value of the money you keep, which slightly favours the higher excess. And premium rates change, so a table dated to a retrieval in 2026 will not match a quote taken later.

For how the same premiums move with age rather than with excess, see health insurance cost by age.

Frequently Asked Questions

What is the best health insurance excess in NZ?

On published quotes for a joint policy covering two 40-year-olds, the first $500 of excess is the best-value step at all five insurers compared, earning between $360 and $1,154.67 a year against $500 of exposure (MoneyHub NZ, retrieved 19 August 2026). Whether to go further to $1,000 depends on the insurer: at nib, AIA and Partners Life the second step still pays inside about a year, and at Southern Cross it takes longer.

Does the excess apply to every claim?

Not on the two largest health insurers. Southern Cross applies the excess to each person once each claims year, and only to the surgical procedures, chemotherapy and radiotherapy benefits (Southern Cross excess factsheet, retrieved 19 August 2026). Always check your own policy document, because the wording differs by insurer and by plan.

Can I get health insurance with no excess in NZ?

Not on Southern Cross Wellbeing One or Wellbeing Two, which offer $500, $1,000, $2,000 and $4,000 only (Southern Cross excess factsheet, retrieved 19 August 2026). Other insurers do quote a nil excess, and the published comparison above includes nil-excess prices for five of them.

How much does a $1,000 excess save?

Between 24% and 39% of the annual premium, depending on the insurer, on published quotes for a joint policy covering two 40-year-old non-smokers (MoneyHub NZ, retrieved 19 August 2026). In dollars that ranged from $636 to $1,571.13 a year across the five insurers compared.

Can I change my excess later?

Yes, insurers generally allow it, but Southern Cross specifically warns that adding, removing or changing an excess level may affect the level of cover and recommends taking financial advice before making the change (Southern Cross excess factsheet, retrieved 19 August 2026). A change made mid-year may also interact with a claim already in progress.

Talk to a Licensed Adviser

QuoteHub operates under Smiths Insurance & KiwiSaver (FSP712931), a licensed Financial Advice Provider. Choosing an excess is a cash-flow decision as much as an insurance one, and the right level depends on what you could actually pay at short notice. Start a review and an adviser will run the excess options on your own plan and quote the difference properly. The insurers we can arrange cover with are listed on our disclosure page.

References

• MoneyHub NZ, health insurance, annual policy cost at nil, $500 and $1,000 excess for five insurers on a joint 40-year-old profile, and MoneyHub's own stated saving range of 24% to 38%. Retrieved 19 August 2026.
• Southern Cross, Excesses for Wellbeing One and Wellbeing Two plans, excess options of $500, $1,000, $2,000 and $4,000; the excess applies per person once each claims year; it applies only to the surgical procedures, chemotherapy and radiotherapy benefits. Retrieved 19 August 2026.
• nib NZ, compare plans, flexible excess on hospital plans, and nib's published online example priced on a $250 annual excess. Retrieved 19 August 2026.
• Consumer NZ, health insurance buying guide, premium price survey method and the recommendation to raise the excess as premiums rise with age. Retrieved 19 August 2026.

This article is general information only and does not constitute personalised financial advice. Every premium shown is a published illustration for the profile stated beside it, not a quote, and the break-even figures are arithmetic on those published prices. QuoteHub operates under Smiths Insurance & KiwiSaver, a licensed Financial Advice Provider (FSP712931), legal entity Craig Smith Business Services Limited. For advice tailored to your situation, speak with one of our licensed financial advisers.

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