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Why do health insurance premiums increase with age?

In its simplest terms, insurance premiums go up when the cost of paying out claims increases.

When it comes to medical, or health insurance, the claims increase as clients get older and therefore premiums have to rise to fund the claims.

There are several other significant factors that contribute to the increase in premiums:

  1. Access to the public heath system often takes longer, so private health insurance pays a higher price for quicker access.
  2. New medical technology is very expensive; so new treatments and new drugs push up medical expenses much faster than many other costs
  3. New Zealand’s population is getting older on average, and increasing in its reliance on the health system.

The chart below shows quite clearly that the average claims costs increases the older clients get, which is the key driver of the increasing premiums.

Insurance Claims by Age

If you are concerned about your the existing health insurance coverage or its costs then you should review it. Please don't just cancel health insurance without considering your options, for example you can probably reduce your premiums by increasing your excess.

Insurance, Health Insurance

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