Life insurance explained - Finding the right cover | Finder NZ

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Life Insurance

Life Insurance Finder makes it easy to compare life insurance options in New Zealand.

Life insurance can give the people around you financial security. If you’ve got married, bought your dream house or have a family, now’s the time to protect them.

This type of insurance can include death cover, total permanent disability insurance (TPD), funeral insurance and income protection.

What is life insurance?

Life insurance provides you with financial protection in life-changing circumstances, usually in the form of a lump-sum payment ranging from $25,000 to $2 million. In exchange for financial security, you pay a monthly or annual fee, more commonly known in the insurance industry as a premium. If something serious goes wrong, such as severe injury, illness or death, it can help you and your family cope financially.

How does life insurance work in New Zealand?

Generally, there are two different ways to purchase life insurance:

Through a financial adviser – Your adviser assesses your current financial situation, compares options from a variety of insurers and determines the type of cover you need. The advantage of doing it this way is that you receive expert advice and help deciding what kind of cover you need as well as access to a wider range of policies. The downside is that it often costs more.

You can compare policies yourself – Work out what kind of cover you want and determine which one is right for you. This gives you the advantage of being able to pick out almost any kind of cover and find exactly what you’re looking for. Typically, it can get you cover equivalent to what you can find with an adviser but more cheaply. However, making sure you’ve found the right cover can be time-consuming, complicated and confusing.

If you pass away or become ill or injured and can no longer work, most life insurance policies pay out a lump sum, which helps ensure that your family continues to enjoy the same financial standard of living as before. A lump-sum payment can cover expenses including:

  • Loan repayments e.g. mortgage, rent and car payments
  • Everyday living expenses and bills
  • Funeral expenses
  • School fees and expenses for your children
  • Any other outstanding debts

What else can I find on this page?

Key features you should check when comparing life insurance

Consider the following when comparing life insurance policies:

Check The lump sum. This is the amount you will be insured for. To calculate the lump sum you require, take stock of everything you pay for and would need to pay for in the future.

Check Waiting periods. This is the amount of time that you need to wait before you can claim on your life insurance. The longer the waiting period, the lower the premium cost, but this can come with risk.

Check Premium type. There are stepped premiums or level premiums. Consider which is the better payment method for you now and in the future.

Check Future insurability. A guaranteed insurability feature lets you stay covered when your personal situation inevitably changes as you grow older.

Check Expiry age. This is a tricky life insurance term worth looking out for. An expiry age is when a policy has an age limit, after which you can’t make any more claims.

Factors that taken into account when getting a quote

Factors that will be taken into account when calculating your life insurance quote include:

  • Your age
  • Your gender
  • Your health, including pre-existing medical conditions
  • Where you live
  • If you smoke
  • The policy that you choose
  • Your premium structure e.g. stepped or level premiums

How to get cheap life insurance

You can still get cheap life insurance without compromising on quality. The key is to know what to look for and to understand your personal needs. For example, you can avoid extras like trauma cover if you’re just looking for basic life insurance.

Another essential tip: compare! Life insurance is a big commitment, so it’s worth taking the time to find a policy that offers good value for your money, which means shopping around and reading the fine print. There’s no point in getting a cheap policy if it can’t adequately take care of your finances when the time comes.

Where to find the best life insurance

When it comes to finding the best life insurance, everyone’s needs are slightly different. Regardless, there are a few key things you can keep an eye out for, and if you follow these tips you’ll be well on your way:

StarDon’t fall for a well-known brand. Just because you’ve seen their ads doesn’t mean they’re necessarily the best life insurer. Instead, look for policies that suit your specific circumstances. Do you have a lot of people depending on you? It might be best for you to purchase life insurance through a financial advisor. Are you young? Then be sure you opt for level premiums.

StarCompare! It might seem obvious but this is probably the most essential part of buying life insurance. When you shop around, you build a clearer understanding of what is best for you. Don’t rely on one website either (even Finder!) and use online tools to your advantage. It’s not fun but by setting aside some time to fill in quotes and compare, you’re more likely to find a better deal.

StarRead the PDS. Make sure you understand what you’re covered for. Otherwise, you risk being underinsured and leaving things in a bit of a mess if something does go wrong. You won’t have to do it often, so put the time in now and have peace of mind for the future.

Why use Finder to compare?

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Finder is independently owned.

Unlike some other comparison services, Life Insurance Finder is independently owned and operated. Any life insurers that we partner with do not approve our content or editorial direction.
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No phone calls unless you actually apply.

You don’t need to enter your contact details to compare the prices and features of different policies online. The only call you’ll receive will be from an adviser once you decide on the cover you want.
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More than just comparison.

We believe in providing you with informative guides so you aren’t just blindly comparing policies based on price alone. Empower yourself and make your choice using knowledge that helps even after your purchase.

Who offers life insurance in New Zealand

There are a number of life insurance providers in New Zealand, including:

  • AIA
  • Asteron Life
  • Fidelity Life
  • Partners Life
  • Cigna

Frequently asked questions

More guides on Finder

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    Depending on the applicant and the type of life insurance policy, there may be no medical tests required.

  • Term life insurance

    Find out how term life insurance actually works.

  • How to write a will

    Writing a will is one of the most important things you can do to protect your loved ones. Here are the steps you need to take.

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