Dealing with a Diagnosis: Insurance Options When You Are No Longer Standard Risk

Receiving a medical diagnosis is stressful enough without worrying about your financial safety net. For many New Zealanders, a health scare brings a secondary wave of anxiety: *Will I ever be able to get insurance again?*

The short answer is yes, but the rules of the game have changed. While you may no longer fit the standard box that online calculators rely on, a diagnosis is not a closed door. It simply requires a more strategic approach to how you apply for, structure, and maintain your cover.

The Golden Rule: Hold On to What You Have

The single most important piece of advice following a diagnosis is this: Do not cancel any existing insurance policies.

Your existing cover is a contract based on your health *at the time you took it out*. If you were healthy ten years ago when you signed the papers, and you are diagnosed with diabetes today, your insurer cannot cancel your policy, increase your individual premium because of the diagnosis, or add new exclusions. You are fully covered.

If you are struggling with premiums, explore every other option, (reducing the sum insured, removing inflation indexing, or suspending cover temporarily) before you cancel. Once you let a policy lapse, that standard risk status is gone forever. You will likely never be able to buy that same quality of cover at that price again.

The New Reality: Loadings and Exclusions

When you apply for *new* insurance (or try to increase your existing cover), you have a legal duty to disclose your new medical history. The insurer's underwriting team will assess this risk and typically offer one of three outcomes:

1. Accepted with a Loading

This means the insurer is willing to cover you for everything, (including your condition) but they will charge you more to do so.

• •*Example:* You have well-controlled high blood pressure. The insurer offers you full cover but adds a +50% loading to your premium. You pay more, but you have total peace of mind.

2. Accepted with an [Exclusion](/blog/understanding-insurance-exclusions)

This is common for chronic or mechanical issues. The insurer covers you for everything *except* your pre-existing condition and anything related to it.

• •*Example:* You have a history of chronic lower back pain. The insurer offers you Income Protection that covers cancer, flu, and car accidents, but specifically excludes claims related to your spine or back muscles. This is still highly valuable cover.

3. Deferred

Sometimes, an insurer just needs time. If you are currently undergoing tests or waiting for surgery, they may defer your application until treatment is complete. This isn't a rejection; it is a pause while treatment is completed.

The Group Cover Loophole

If individual insurers are declining you or making premiums unaffordable, your employer might be your best asset.

Many medium-to-large New Zealand companies offer Group Insurance Schemes. The secret weapon of these schemes is the Automatic Acceptance Limit (AAL). This is a threshold (e.g., $250,000 of Life Insurance) below which the insurer asks no medical questions.

If you join a company with a group scheme, you can often get covered for your pre-existing conditions automatically, up to that limit. It is one of the few ways to get full coverage for a serious health condition without underwriting. If your employer is reviewing benefits, EmployeeLab is a good company to talk to about employee benefits.

The Importance of Full Disclosure

When applying for cover with a medical history, your honesty is your only protection.

New Zealand law requires you to take reasonable care not to make a misrepresentation. Practically, this means you must answer every question on the application form accurately. If you have forgotten to mention a past specialist visit and you later need to claim, the insurer can void your entire policy, even for unrelated claims.

• •Tip: Do not guess dates or diagnoses. Ask your GP for a copy of your medical notes before you apply. Attach these notes to your application. This transfers the burden of reading them to the insurer and protects you from accidental non-disclosure.

Guaranteed Acceptance (The Last Resort)

If traditional insurers decline you and group cover isn't an option, Guaranteed Acceptance products exist. These are typically marketed as funeral cover or seniors insurance.

• •Pros: They ask no health questions and cannot turn you down.
• •Cons: They are expensive relative to the cover amount, and they usually have a stand-down period (often 2 or 3 years). If you die from a non-accidental cause during this stand-down period, they will only refund your premiums, not pay the sum insured.

These products serve a specific purpose but should generally be the last option you explore, not the first.

Don't Go It Alone

Applying for insurance with a medical condition is not something you should do via an online comparison site. An automated system will likely just trigger a computer-generated decline letter.

Work with a specialist Insurance Adviser. Experienced advisers know which insurers are lenient on specific conditions. One insurer might be very strict on BMI, while another is more relaxed. One might exclude all mental health conditions, while another might only exclude the specific issue you suffered from.

Your medical records tell a story. An adviser helps you tell that story in a way that underwriters understand, giving you the best possible chance of getting the approval you need.