Keep Premiums Lower - Tailor Wait Periods and Payment Terms
With the cost of living continuing to put pressure on household budgets, it’s understandable that many New Zealanders are reviewing their monthly expenses. One of the biggest misconceptions is that lowering premiums means reducing your protection. In reality, it’s often about designing your cover more effectively. What many people don’t realise is that some types of personal insurance can be tailored to suit both your budget and your financial situation so you’re only paying for cover that genuinely fits your needs.
There can be opportunities to review how your cover is structured and explore options that better align with your current budget and lifestyle.
Different types of insurance work in different ways
Income Protection, Mortgage Repayment Cover and Rent Cover are designed to replace some of your income if you’re unable to work due to illness or injury. Because of how these policies work, there are often several options that can influence the cost of your premium.
Life Insurance, Trauma Cover and Total & Permanent Disability (TPD) Cover are different. These policies generally provide a one-off lump sum payment if a qualifying event occurs, so they don’t usually offer the same level of flexibility around waiting periods or payment durations.
Understanding these differences is one of the reasons personalised advice can make such a difference.
Choose a waiting period that matches your financial buffer
A waiting period is the length of time between becoming unable to work and when your benefit begins. Generally, the longer the waiting period, the lower the premium. For example, if you have accumulated annual leave, sick leave available, emergency savings, or a partner’s income that could temporarily support the household you may be comfortable waiting longer before your benefit starts. On the other hand, if your household relies heavily on your income and you have limited financial reserves, a shorter waiting period may provide greater peace of mind.
There isn’t a “best” waiting period, only the one that best suits your circumstances.
Consider how long you need the benefits to be paid
Another option is to adjust your benefit payment term. This determines how long benefits could continue if you’re unable to return to work due to an eligible illness or injury. Depending on the insurer and product, payment term options may include shorter periods such as two years, or much longer terms extending for several years or even to a specified age. A shorter payment term will generally reduce the premium, while a longer payment term provides greater long-term protection but usually comes at a higher cost.
The right option depends on factors such as your financial commitments, existing assets, savings and overall financial goals. While reducing cover or extending wait periods is straightforward, reversing these changes in the future (i.e., shortening wait periods or increasing your benefit period) may require additional medical underwriting from the insurer.
Your existing financial position matters
Your savings, emergency fund, annual leave, sick leave and other financial resources all play a role in determining what level of cover is appropriate. For example, someone with six months of emergency savings may choose a longer waiting period than someone living from one pay cycle to the next. Rather than duplicating what your savings already provide, insurance should complement your overall financial plan.
Small adjustments to waiting periods or benefit payment terms can sometimes create meaningful savings while still providing protection when it’s needed most. The objective isn’t to have the cheapest policy – it’s to have cover that’s affordable enough to keep long term while still protecting what matters most.
Where personal advice adds value
No two households are the same. A young professional with minimal financial commitments will likely need a different insurance structure than a family with children, a mortgage and one primary income earner. When we provide advice, we don’t simply recommend a policy. We take the time to understand your financial position, your existing safety nets and your goals before comparing options across insurers. That allows us to tailor your cover so you’re not paying for features you may not need, while helping ensure the protection you do have aligns with your circumstances.