What is Life Insurance?
Life insurance is a contract between an insurer and a policyholder. A life insurance policy guarantees the insurer pays a tax-free death benefit to named beneficiaries when the insured dies or becomes terminally ill in exchange for regular premium payments made by the policyholder.
The death benefit is income tax exempt in New Zealand and is paid as a lump sum and helps give your family financial protection should you pass away – helping your loved ones maintain their living standard or pay the mortgage.
And if you are diagnosed terminally ill with less than 12 months of life expectancy, the tax-free death benefit is paid to you.
Our financial advisors can help you figure out how much you need. The cost of a life cover policy you buy as an individual depends on your age, gender, health, medical history and lifestyle.
One-on-one guidance to help you protect what you have while growing more
Whether you’re just starting to think about your financial future or managing a complex situation, we tailor our flexible solutions to your needs. We explain our offerings in plain language and help you create customised solutions to meet your needs and budget.
How much life cover do I need?
You’ve worked hard to provide for your family and build wealth, so you and your family must be protected when life’s unexpected events occur.
This is where insurance planning and risk management play a critical part in your financial plan to ensure you’re not overinsured or underinsured.
The best way to figure out how much life cover you need is as part of a larger financial plan.
Our financial advisors can help you see gaps and strengths in your current financial situation and where you are headed.
We use a tool that helps you visualise and organise your financial life, so you can see and understand your financial picture like never before.
As we create your financial picture, you will have clarity and confidence about how much life cover you need. Because we look at your cash flow, debt management, retirements savings, potential property investment opportunities and what is acceptable risk to you.
Your thoughts on the best policy amount and type of policy could change considerably after seeing where life insurance will fit into the big picture for you and your family.
Compare life insurance types?
There are two types of life insurance policies available to meet all sorts of needs and preferences.
Depending on the short- or long-term needs of the person to be insured, the choice of whether to select Rate for Age or Level life insurance is important to consider.
Rate for Age
Annual (or yearly) renewable term is a one-year policy, but the insurance company guarantees it will renew the policy on each anniversary up until an agreed age, regardless of the health of the insured person, and with a premium set for the applicant’s age at that time.
Pros: Rate for age policies are the cheapest type of policy.
Cons: Premiums increase because of your age.
Level - Fixed Life Insurance
Level (fixed) term life insurance policy, where the premiums are set at the start and stay the same for the agreed period. Most commonly, fixed premiums until age 65, 70 or 80.
The insurer guarantees the premiums and cover amount don’t increase. You can select to index-link a policy. Indexation is an automatic increase to the amount of insurance coverage you have to make sure the impacts of inflation do not erode the value of your coverage.
When the time period comes to an end, most insurers convert your policy to a Rate for Age.
Pros: Premiums stay the same no matter your age.
Cons: Premiums start higher compared to Rate for Age.
Stepped vs level premiums
Rate for Age life insurance differs from level premium life insurance in several ways but tends to best meet the needs of most people.
How does life insurance work?
Life insurance can help protect your family financially with a tax-free payout if you die or if you are diagnosed with a terminal illness (expected to live less than 12 months). You’ll get the one-off lump sum.
Your family circumstances are different and unique, but a life cover payout could improve your family cash flow significantly and help towards:
- Reduce or pay off the mortgage
- Finance Secondary school fees
- Pay funeral expenses
- Cover your salary
- Help with health and living costs if you become terminally ill
- Childcare costs
- Family holiday
In short, life cover can be used as wealth and asset protection.
Get Life Insurance advice
Is it time to review your life insurance?
What does life insurance cover
Tax-free one-off payment
There is no tax in New Zealand on Life insurance and therefore any benefit payout is tax-free.
Top Financial Strength
We only compare New Zealand’s leading life insurers with the highest financial credit strength, which speaks about the ability to pay claims now and in the future.
Worldwide Cover
Policies provide you with worldwide cover, 24 hours a day.
Guarantee Policy Upgrade
Your policy will benefit from future benefit enhancements automatically. And when circumstances change and time to claim, you claim will be assessed on the most favourable policy wording
What does life insurance not cover?
Suicide and self-inflicted injuries in the first year
If within the 13 months of the policy being issued you die as a result of suicide or intentional and serious self-injury, you are not covered.
Not paying your premiums
Policies that have lapsed and cancelled have no cover.
Hazardous Activities and Pursuits
Some hazardous activities and pursuits are uninsurable.
Key Life Cover Features
Terminal Illness Benefit
If you are diagnosed with a terminal illness with a life expectancy of fewer than 12 months, the Life Cover benefit is paid early in cash.
Special Events Increase Facility
It enables you to increase the sum assured under your cover following a significant event in your life, resulting in increased financial responsibilities. These important events include: having a child, your child starting secondary school, taking out or increasing a residential home loan or receiving a salary increase and other significant events covered.
Serious Illness Cover
Sometimes called Critical Illness Cover (includes about 50 different illnesses and treatments), it can be added to the life cover at an extra cost when you take out your life insurance policy.
Compare Life Insurance Quotes
Get an instant quote, calculate your cashback bonus and get advice from a life insurance expert.
The Life Insurance Policy
A Life Insurance policy is a contract between an Insurance Company and you (the policy owner). It’s an agreement that, in the event of your death, the Insurance Company will pay the sum insured to your loved ones (or to you, if you are terminally ill and expected to die within 12 months). Your cover is fully tailored and takes into account your age, medical history and personal lifestyle.
A customised insurance policy is necessary to ensure the financial stability of your loved ones, in the event that a tragedy occurs.
How to find the best life insurance policy
We exclusively compare and recommend the leading life insurers in New Zealand, based on the following criteria:
- the highest credit rating: speaks about the financial abilities and liquidity to pay your claims.
- Claims culture and underwriting:
- Increasing premiums and fixed premiums:
- Automatic Policy Upgrading:
- Riders or optional extras:
Why?
Life insurance can be a long-term purchase and you’d want a company that has the strongest financial rating to pay claims.
During 2019, the best life insurance companies in NZ paid out more than $800M in claims combined.
| International Credit Agencies | Minimum Credit Rating |
|---|---|
| A. M. Best | a- |
| Fitch | A- |
| Moody's | A3 |
| Standard & Poor's | A- |
How much does life insurance cost?
Several factors contribute to the price of your life insurance policy. Understanding this can help make the application process smoother and ensure you make the best decision regarding value for money and protection for your family.
Some of the factors that determine the cost of a life insurance policy are:
- Gender
- Health
- Age
- Your hobbies/lifestyle
The type of coverage (rate for age vs. level), the term length, and the coverage amount
A level premium cover is budget-friendly, with premiums that don’t increase. See the graph below comparing fixed quotes for a healthy, non-smoking male from age 40 until age 80.
How to buy life insurance?
Your employer might offer you to become part of their group life insurance at discounted rates or as an employee benefit.
This would be a great place to start because, generally, you would be accepted without any underwriting.
Otherwise, you can work with a financial professional who can guide you through the options that will fit your immediate needs and long-term goals.
