Life Insurance in New Zealand

For those that have never purchased life insurance before, the thought of purchasing life cover for yourself can be a bit daunting.

There are plenty of life insurance companies in New Zealand to choose from, and each of these companies offers a range of policy variations you need to decipher & compare…and comparing life insurance policies isn’t easy!

If you are buying your first life insurance policy, the process can be a little overwhelming. Cove has written a range of articles on what to look for when comparing life insurance, and whether you even need life insurance. But before you dive into the nitty-gritty details, let’s start by explaining exactly what life insurance is.

In a nutshell, life insurance pays a lump sum of money to a person named in the policy, if the insured person dies, and there are options that include a payment in the event of a major health crisis.

In reality, there is a lot that goes into deciding which policy is best for you. There are a lot of questions you will need to ask yourself, such as how much cover you need, which type of product works best, and whether to use a broker or get it all sorted online.

How much will life insurance cost me?

Life insurance premiums are based on a range of factors, such as your age, gender, smoking habits, and the amount of coverage you choose to purchase.

There are other factors that are often taken into account when determining the price as well. Examples include whether your family has a history of certain illnesses, or you are employed in a dangerous occupation.

For this reason, there is no one answer to the question “how much will life insurance cost me?”. Life insurance is totally dependent on your own personal circumstances and stage in life; the easiest way to discover how much life insurance will cost is to actually get an online quote.

Getting a life insurance quote isn’t as tedious as it sounds. These days it can all be done online, and you will be able to view your price after answering just a handful of questions.

How do I apply for life insurance?

Life insurance can either be purchased directly from a life insurer, or you can choose to purchase via a life insurance broker.

Both have pros and cons. Many people prefer getting life insurance sorted quickly online, without the hassle of organising a meeting with a broker and discussing your habits, hobbies, and health conditions face to face. However brokers can provide value to those with more complex situations, or who have pre-existing conditions that need further discussion. For this audience, brokers can provide peace of mind that you have disclosed all the required information to ensure you are adequately covered.

What are life insurance premiums, and how are they calculated?

Life insurance premiums are essentially the cost of your coverage. Premiums are typically paid fortnightly, monthly or annually. In most cases, premiums are reviewed annually, and they can be reduced, remain the same, or increase, based on a range of factors.

When you first purchase life insurance your initial premium is calculated based on your answers to a number of questions. This is why you will be asked your age, gender, occupation, education, and whether you have any pre-existing conditions when you decide to purchase life insurance. Your premium is tailored especially for you, based on your individual circumstances. Life insurance isn’t a one-size-fits-all product.

One of the key factors which contribute to the calculation of your premium is your level of cover. This is the lump sum paid when a claim is successfully lodged and typically ranges from $100,000 to over $1 million. When purchasing life insurance, one of the main decisions you will be asked to make is the level of coverage you want. As stated by the Financial Markets Authority, you should “think carefully about the type and amount of cover you need for your own circumstances, to prevent being over or under-insured”. This means taking out the amount of cover that is right for you.

Life Insurance for Single Parents

Studies (albeit US-based studies) have shown that many single parents are underinsured, or have no life insurance at all. This means that children living within single-parent homes are at a greater risk of financial hardship if their sole guardian was to pass away.

I’m single with no dependents, should I buy life insurance?

In most cases when you are single no one else is financially dependent on you. However, there are some exceptions to this that you should be considering if you’re single.

If you are financially supporting others, such as ageing parents or siblings, taking out life insurance can help to continue this support should you die. Similarly, if you have debt that would be passed onto surviving family members, life insurance may help to ease the burden on them.