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
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:
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.
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.
Premium type. There are stepped premiums or level premiums. Consider which is the better payment method for you now and in the future.
Future insurability. A guaranteed insurability feature lets you stay covered when your personal situation inevitably changes as you grow older.
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 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:
Don’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.
Compare! 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.
Read 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?
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.
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.
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:
Frequently asked questions
Insurance covers you for things that you can’t control, which is why you’re not generally covered if you lose your job. After all, you can get another one. Having said that, some of New Zealand’s insurance brands now provide combined cover for involuntary redundancy.
If you rely on an income to live, you may still want to protect this. Your income is your biggest asset so, just as you insure your car, you may want to consider income protection insurance (cover if you can’t work for a temporary period) and TPD insurance (cover if you can’t ever work again).
In short, yes, as it can seriously affect your premiums and lead to reduced coverage.
You are unable to insure a child under the age of 10 in New Zealand. The maximum you can insure your children for is usually $50,000, but you may find an insurance company that will cover them for more. Life insurance for children is not sold straight to the public in New Zealand, instead, you need to go through an advisor. Insurance for children covers things like medical expenses and allows parents to take time off work should their child become seriously unwell.
Both buying direct and using an insurance broker or adviser have their pros and cons.
Benefits of buying direct:
You can get cover online or over the phone quickly with no additional tests.
Benefits of buying with a broker:
They may be able to find policies that you can’t find by yourself.
They can compare more options and assess for extras.
They can liaise with the insurers, negotiate deals and find bargains.
They can offer a wealth of advice and information, and answer any questions you have.
There are various ways to arrive at the right sum insured:
Get an estimate from a self-assessment calculator. Calculators can help you add up all the financial obligations that you need to cover in the event of your death, which may include mortgage/debt repayments, education fees and everyday living expenses.
Consult a financial adviser or insurance broker. They can help you conduct a more detailed cost analysis to help you plan for your family in the longer term and in more detail.
Insurers class anyone that has smoked tobacco or any other substance in the last 12 months as a smoker.
Yes. Generally, two people can be covered under a single policy. Discounts for multi-policies may be offered by some brands.
Some life insurance companies require you to undergo medical or blood tests before you can sign up for cover. However, most insurers only require medical or blood tests at application if you are over a certain age or you have a pre-existing condition that needs assessing further. Additional evidence may be required in the event of a claim.
If you are in good health and do not have any pre-existing conditions then the most suitable policy for you is probably one which requires testing. If you are in poor health or have pre-existing conditions then you will probably not benefit from a policy which requires testing.
It depends on the condition and the treatment. Every insurer has different rules for pre-existing conditions so it is best to check the product disclosure statement (PDS) before taking out cover. If the insurer decides your pre-existing medical condition presents too great a risk for them, they will generally exclude it from cover. For example, if you are applying for cover and have a history of back problems, your insurer may exclude all claims related to back conditions from your policy.
There are generally two options available to you:
It might be worth speaking with an insurance consultant to see if there are any companies out there that are willing to provide you with cover. Assessment criteria vary between insurers, so it’s always worth looking around if you have struggled to get cover due to a medical condition.
You may also be able to have your current insurer review your condition when it comes time to renew your policy to see if the exclusion can be lifted if your situation has changed.
Yes. You can apply to increase or decrease your cover at any stage to meet your needs. It’s worth noting that you will be required to undertake another round of assessments with your insurer.
Yes. You can update your beneficiaries at any stage.
Yes. Most policies offer a 30-day cooling-off period whereby premiums paid during this period are refunded. No premiums will be refunded if you cancel your policy after the cooling-off period.
Generally, all deaths except for suicide are covered within the first 13 months of the policy. Accident-only life cover only provides cover for death that is the result of an accident. Some policies may exclude deaths related to pre-existing medical conditions for a set number of years from the start date of the policy.
Most policies will not pay a benefit for claims arising from:
Intentional self-inflicted injury or self harm
Acquiring HIV, AIDS, Hepatitis B or Hepatitis C, unless if acquired through performing the duties of your occupation
Disablement caused during engagement in the armed forces of any country
Pregnancy, uncomplicated childbirth or miscarriage
Engagement in unlawful acts
Aviation activity unless you are a fare paying passenger on a scheduled flight
Yes. Most policies provide cover 24 hours a day anywhere in the world. Countries that you are advised against travelling in are typically not covered.
In the event of your death, your life insurer will pay out the nominated death benefit to one or more of your financial dependents or to your estate. You should make sure your estate has the necessary documentation so that they can claim on your behalf (see below).
Generally, the beneficiary will need to provide:
A completed claim form
The original policy document and policy schedule
A copy of the deceased’s birth certificate
A certified copy of the deceased’s will
Probate or letters of administration
Most policies allow you to nominate up to five (5) beneficiaries under your policy.
If you claim for injury or illness on a life cover policy, your benefit is reduced by the amount paid and your premiums adjusted accordingly.
If your premiums are becoming too expensive or if you’re going through financial hardship, there are options to freeze your premiums for a short period. You should contact your insurer to discuss your options. If you don’t reach out to your insurer and your premiums go into arrears, you run the risk of your policy being cancelled.
Gary Hunter is a writer at Finder, specialising in insurance. He has a Bachelor of Arts in English Literature from the University of Glasgow and has previously worked for Real Insurance as a content specialist.
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No medical life insuranceDepending on the applicant and the type of life insurance policy, there may be no medical tests required.
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