Life insurance is one of the most important financial protections you can have - but premiums can add up quickly
The good news? In New Zealand, there are several proven ways to reduce life insurance premiums without sacrificing the protection your family needs.
Below are the most effective strategies used by advisers and insurers today.
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1. Review and Remove Premium Loadings
One of the biggest hidden costs in life insurance is a premium loading.
A loading is an extra charge added due to factors like:
- Health conditions (e.g. high BMI, past illness)
- Smoking status
- Risky occupations or hobbies
Why this matters
Many people forget to review their loadings—even when their situation improves.
How to reduce it
- Request a loading review every 1–3 years
- Provide updated medical evidence (e.g. weight loss, improved blood results)
- Quit smoking and reapply
This can reduce premiums by 10%–100%+, depending on the original loading.
2. Move from Smoker to Non-Smoker Rates
This is one of the fastest ways to reduce premiums significantly.
In NZ, insurers typically require:
- 12 months nicotine-free
- May include testing (blood/urine)
Potential savings
- Non-smoker rates can be 30%–50% cheaper than smoker rates
3. Use Wellness-Based Discounts (e.g. AIA Vitality)
Programmes like AIA Vitality reward healthy behaviour with premium discounts.
How it works
- You receive an initial discount (typically around 10%)
- Discounts can increase over time based on engagement
- Activities like exercise, health checks, and tracking improve your discount
Real impact
- Immediate savings from year one
- Helps offset future premium increases
4. Bundle Benefits for Multi-Policy Discounts
Bundling multiple covers (life + trauma + disability) can unlock multi-benefit discounts.
Typical structure
- Add at least one additional benefit (e.g. trauma cover)
- Meet minimum cover thresholds
Potential savings
- Around 10%–15% discount on premiums
Real Client Example: Saving $122 per Month (While Increasing Cover)
Steve and Karen already had life, trauma, and disability cover in place – but their structure wasn’t optimised.
Before:
- Policies spread across benefits without bundling
- Monthly premium: $671
What changed:
- Moved to a new insurer with multi-benefit bundling discounts
- Restructured their cover to align benefits properly
- Slightly increased their sum insured amounts
After:
- Monthly premium: $549
Result:
$122/month saving
$1,464 per year
Better overall cover
Key takeaway:
You don’t always need to reduce cover to save money – structure matters just as much as price.
5. Choose the Right Premium Structure
Your premium type has a major impact on long-term cost:
Level premiums
- Higher upfront cost
- Locked in for a set period
- Often cheaper over the long term
Stepped premiums
- Lower initially
- Increase each year with age
Strategy
- Use level premiums during high-risk years
- Adjust later as your needs change
6. Adjust Your Cover (Smartly)
You don’t need to over-insure.
Optimisation strategies:
- Reduce cover as debt decreases
- Match term to mortgage or children’s dependency period
- Avoid duplication across policies
Even a small reduction in cover can lower premiums meaningfully.
7. Pay Annually Instead of Monthly
- Paying annually can reduce premiums by around 4–5%
A simple way to save without changing your cover.
8. Review Your Policy Regularly
Premiums change due to:
- Age increases
- Industry repricing
- Claims trends
What to do:
- Review every 1–2 years
- Compare insurers
- Check for better pricing or structures
9. Work with an Adviser (Often Free)
Advisers can:
- Compare multiple insurers
- Identify hidden discounts
- Manage loading reviews
And typically, there’s no direct cost to you.
Key Takeaways
The biggest premium reductions typically come from:
✔ Removing or reducing loadings
✔ Moving to non-smoker rates
✔ Using wellness discounts
✔ Bundling benefits correctly
As Steve and Karen’s example shows, you can sometimes save over $1,000 per year while improving your cover.