Value or price: the choice for life and health insurance

Nowadays, almost everyone is price sensitive. This is understandable and in line with human nature. However, when buying insurance, you cannot only consider the price of insurance. The value of insurance is the key to purchase insurance. In the highly competitive New Zealand insurance market, the insurance pricing generally tends to be the same, and usually will be adjusted within a few months after the insurance price changes.

The change of insurance price is based on an insurer’s claim experiences and its premium balances. The cheapest premium on any given day has the potential to become the most expensive on the other day.  In the long run, the value of insurance is more important than the price of insurance.

The value of insurance can be found in the following aspects.

First, the insurance products are going to best meet customer needs over the long term. This is the reason to buy insurance.

Secondly, the affordability of insurance products, that is, the design of insurance prices should be within the range of customers' ability to pay. This is the basis for ensuring insurance sustainability.

Thirdly, the insurance is designed to be accessible and claimable. That means we want an insurer with a proven track record around paying claims in the last few years.  The price change or higher insurance premium reflects the shares of their premiums being paid out on claims. It also means that they are paying more in claims.

Fourthly, premium discount is another issue that needs to be considered. Some insurance companies provide premium discounts for loyal customers, that is, long-term customers of insurance companies will get better pricing discounts. 

Fifthly, product adjustability and more options to choose are also important to customers. Typically, premiums increase as one gets older. However, the insurance requirements for a customer may also need a change and appropriate adjustments to the overall packages, as the customer’s personal and financial conditions change. More product options will make it easy for changing or converting insurance policy over time to match customers’ changing needs.