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Expert comparisons of NZ health, life & disability insurance

Life insurance in New Zealand: Parents with their baby

Life Insurance

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Why take out life insurance in New Zealand?

Nobody wants to dwell too much on what will happen when they or a loved one passes away. It’s particularly hard to consider the costs that might arise from a terminal illness or sudden death. But If there are people who depend on you financially, the best thing you can do to protect them is take out life insurance.
An accident or a terminal illness can create financial problems that most people don’t think about until the inevitable happens. But the stats around the leading causes of death in New Zealand are sobering to read.
  • Cancer can strike at any age. Ministry of Health data shows that out of 26,405 new cancer registrations in 2019, 15,677 (59%) were aged 65 and above, 8,783 (33%) belonged to the 45–64 age group, and 1,609 (6%) were aged 25–44.
  • In 2018, out of the 33,316 deaths in New Zealand, 9,818 (29%) were due to cancer, 4,675 (14%) from ischaemic heart disease, and 2,390 (7%) from cerebrovascular disease.
Sudden death or severe illness is obviously emotionally devastating to your loved ones. At the same time, it exacts a toll on your family’s finances, especially if you’re the main income earner. While trying to get by on a reduced income, your family will need to find funds for your end-of-life care and funeral expenses.
After you’re gone, your partner and children could struggle with financial difficulties and an uncertain future.
But it doesn’t have to be this way.
You can look after your family’s financial future even when you’re no longer around.
To learn more about life insurance plans, send us a message or book a call with a Policywise adviser.

What is life insurance?

Life insurance is a type of coverage that pays out a lump sum if you die from causes covered under your policy, such as an accident or a terminal illness. This payment can provide financial security at a time when physical and mental stress can be taking a huge toll on your loved ones’ own health.
A life insurance lump sum payment could help your family by covering:
  • Funeral costs, which can reach around $10,000
  • Settlement costs for your estate
  • Daily living expenses
  • Childcare, school fees, college tuition for your children
  • Mortgage, unpaid medical bills, car loans, and other debts
  • Your partner’s expenses during retirement
Most insurers have terminal illness cover built into their life insurance policies. Terminal illness cover allows you to get the full sum that you are insured for, or a portion of it, in advance if you are unlikely to survive beyond the next 12 or 24 months (the timeframe will depend on your insurer).
The advance payout could be used to cover:
  • Your lost income after stopping work
  • Income that your family or partner may give up in order to care for you
  • Home modifications and medical supplies if you are being cared for at home
  • In-home care, or respite care if you have a family caregiver
  • Ongoing debt and bill payments
  • Family living expenses
It can also be used to cover medical expenses aimed at managing your symptoms and providing quality end-of-life care. The table below shows some of these potential healthcare expenses.

Treatments

Cost per treatment (NZD)

Chemotherapy

Up to $170,000

Radiotherapy

Up to $55,000

Specialist consultation

Up to $280

Mental health consultation

Up to $255

Physiotherapy

Up to $70

GP consultation

Up to $60

Source: nib. nib.co.nz/health-insurance
You can also check our life insurance FAQs to find out more about insurance costs, benefits, and requirements.

Will my life insurance premium increase yearly?

This depends on the type of premium and policy you choose.
Stepped premiums are cheaper at the start and increase each year. The cost is unlikely to go down unless there are changes in your circumstances, such as if you switch to a less hazardous occupation.
Some people prefer this option as it is more affordable while they’re young and starting their careers or families. However, stepped premiums can become costly as you get older.
Level premiums won’t increase with your age, but may rise due to inflation or changes in your lifestyle – for example if you start smoking. You pay a higher premium at first but level premiums may cost you less in the long term than a stepped insurance policy.
Renewable term life insurance renews after a set number of years, without requiring you to undergo a new medical exam. If you become severely ill or uninsurable within the set period, you can still renew your policy. Keep in mind, though, that your premium will increase when you renew.
The right premium type for you may also depend on other factors, such as your age and how long you want to keep your life insurance policy. Book a call with a Policywise adviser to learn more about which option is better for your circumstances and how you can save on premium costs.

How can I save money on life insurance premiums?

There are a few ways you can lower your life insurance premiums:
  • Work with insurance advisers who can pull quotes from multiple insurers. At Policywise, we help clients compare several plans and quotes so they can get the best life insurance cover at the lowest price.
  • Take out a life insurance policy while you’re young and physically fit.
  • Maintain a healthy lifestyle and keep within the recommended healthy weight range for your body type.
  • Stay nicotine-free and avoid heavy drinking.
  • Don’t choose a level of cover that’s too much for what you or your family may need.
  • Opt out of add-on benefits (also called insurance riders).
  • If you’re young and healthy and looking for short-term cover, consider renewable term life insurance.
  • Pick a premium type (stepped or level premiums) that fits your financial plans.
This is not an exhaustive list. A Policywise adviser can discuss other ways you can reduce your premium based on your specific circumstances.

Comparing life insurance products from New Zealand insurers

AIA NZ Asteron Life Cigna Fidelity Life Partners Life
Talk to a Policywise adviser for more information on these plans and other insurance products such as trauma insurance, income protection, and total permanent disability cover.

Why choose Policywise as your life insurance adviser

  Policywise™ Other comparison sites Traditional brokers Banks Insurers
(going direct)
Completely free service Yes Yes Yes Yes Yes
Quotes from 5  of NZ’s leading insurers Yes Some* Some* No* No
Tailored recommendations fitted to your needs Yes No Yes No* No
Detailed quote comparisons Yes No Some* No No
Comparisons based on third-party research Yes Some Yes No No
Fast & efficient process Yes Yes Some* Yes Some
Independent claims support & advocacy Yes Some Yes No No*
Laser focused on life & disability Yes Yes Some* No Yes*
Experts at negotiating pre-existing conditions Yes Some Some No No
Help you review your existing cover Yes No Yes No No
Avoid ungenerous policies that make claiming hard Yes Yes Yes No Some
Ongoing support Yes Yes Yes Yes Yes
Nicest guys in New Zealand Yes No No No No

FAQs

Will it cost me money to request advice and assistance from Policywise? Definitely not. Our expert advice and assistance are free. The price we quote you for coverage is the same price you’d get if you went to each insurer directly.
How much does life insurance cost in New Zealand? Your life insurance premium will depend on the sum you choose to be insured for, and your age, overall health, smoking status and other factors. Fill out this form so we can provide you with a quote comparison specifically tailored to your circumstances and priorities. 
Does the quoted premium include GST? Correct, all quotes include GST. Click here to request a free quote.
What are my payment options? Most insurers accept direct debit and credit cards. You can choose your preferred payment frequency: weekly, fortnightly, monthly, quarterly or annually.
Does my smoking status affect my life insurance?

Definitely. If you’ve been a smoker in the past year you’ll often attract higher insurance premiums.

But don’t worry. If you decide to stop smoking, just let us know and we’ll help you get a lower premium.

Want an idea of how much premiums cost for smokers? Click here to get a free life insurance quote comparison.

Do insurers offer money-back guarantees? Yes. Insurers have a minimum 15-day free-look period. (Other insurers may offer a longer free-look period.) If you opt to cancel your insurance within 15 days of receiving your policy document, the insurer will refund your premiums.
If I can’t pay my life insurance premium on time, will my policy be automatically cancelled? Normally, insurers allow a grace period to give you an opportunity to catch up on your payments. After this period, the insurer will cancel your policy.
Who can get covered? New Zealand citizens and permanent residents can get covered.
When will my cover start? Your cover will start on the date you opt for when choosing your policy.
What is a policy owner?

A policy owner, as the term implies, owns the life insurance policy. They can make decisions and changes to the policy. The policy owner is also responsible for paying the premiums to keep the policy current and maintain insurance coverage.

The policy owner is not always the person insured. For example, you can be the policy owner, but the person insured is your partner. Many couples opt for joint policy ownership.

Can I add a beneficiary to my policy? Yes. You can add one or more beneficiaries either during your insurance application or at a later date.
What is indexation?

This is an optional life insurance feature. Under the indexation option, your sum insured will be adjusted based on the inflation rate.

For instance, if your sum insured is $100,000 and the inflation rate is 5%, your cover will increase to $105,000 to keep up with current cost of living.

Can I apply for life insurance if I have an illness or other health condition?

You can still apply for life insurance. Note that your premium may be more expensive and there may be exclusions or other conditions on your policy. These details will be discussed with you during your insurance application.

Reach out to a Policywise adviser for expert advice on life insurance plans for your specific circumstances.

Do I need to provide my health history? Yes, we strongly recommend you declare everything you know about your health history during the application process. More information may need to be provided by you or your doctor.
Do I need to update you if my circumstances change? Yes. Please send us a message so we can update your insurer as well.
I’m not satisfied with my existing life insurance cover. Can you find a better option for me?

Definitely! Comparing different insurance products and providers is our speciality.

Give us the details of your existing life insurance cover and we’ll find a plan that’s more appropriate for your circumstances. Talk to a life insurance expert now to know your options.

Can I cancel my cover anytime? Yes. But we strongly recommend that you keep some form of insurance cover for your own and your family’s security.
How do I file a claim? You can file your claim directly with your insurer. Policywise clients can also file their claims through us and we will coordinate with the insurer on your behalf. We can even help you negotiate claims in the future, if necessary.
How are life insurance benefits paid out?

If you are diagnosed as terminally ill and unlikely to survive past a certain term, usually 12 or 24 months, you will receive the lump sum cover or a portion of it as an advance payout.

In the event of your death, your beneficiaries will receive the lump sum cover or the amount that remains after deducting your advance payout.

Is the benefit payout tax-free? Yes. Life insurance payouts in New Zealand are tax-free as long as the owner is an individual (not a business).
What if I have other questions or concerns that are not listed here? That’s not a problem. Just send us a message or click here to book a meeting with one of our life insurance experts.

Click the button to learn more and get protected:

References

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