The cost of $1.5 million of life insurance

$1.5 million is the level at which life insurance stops being a consumer product and starts being an underwriting exercise. The arithmetic that produces it is usually one of three things: a large mortgage on a high-income household, a business obligation such as a shareholder buy-out or a personal guarantee, or an estate that needs liquidity because most of its value is tied up in a farm or a company.

The pricing is comparatively efficient. Fixed policy fees are trivial against a premium this size, and most insurers apply volume discounts, so the cost per dollar of cover is the best available in the market.

The process is where the work is. Expect full medical evidence, financial evidence, and a longer application. This is normal rather than a sign of a problem, and it is one of the clearest cases for having someone manage the process on your behalf.

1. 1

   Financial underwriting

   The insurer establishes that the sum insured is justified — by income for personal cover, or by the business’s numbers for shareholder and key person cover. Payslips, tax returns or an accountant’s letter are usual.

2. 2

   Medical underwriting

   A full medical examination and blood tests are standard, and further tests may be requested based on age and history. This adds weeks rather than days to the process.

3. 3

   Automatic acceptance limits

   Each insurer can accept a certain amount of risk on its own authority. Above that, a reinsurer has to agree the risk as well, which can add time and can change the terms offered.

4. 4

   Structuring

   Deciding who owns the policy — you, a trust, a company — matters more at this level than at any other, because it determines who receives the money and how quickly.

These are the details that decide whether the cover does what you expected. Read them before you compare on price.

• Whether financial underwriting will support the amount, particularly if income is variable or recently increased.
• Whether the medical requirements are acceptable, and how long they will take to complete.
• Whether the policy should be owned personally, by a trust, or by a company.
• Whether the premium is sustainable under stepped, given the size of the sum insured.
• Whether the purpose is business or personal, because the tax treatment of premiums and proceeds differs.
• Whether splitting the cover across two insurers produces a better outcome than concentrating it.

Every New Zealand insurer writes what life insurance costs in nz to its own wording, and the words are where the money is. Two policies that look identical on price can pay very differently when it matters. Closing that gap is the entire job of an adviser.

• Automatic acceptance limits and reinsurer appetite are not published, and knowing where they sit saves weeks.
• Financial underwriting requirements differ, and an adviser knows which insurer will want what before you apply.
• Splitting cover across two insurers, or layering it, is routine work at this level.
• For business cover, the policy has to match the agreement it supports — a buy-sell agreement or a loan covenant — and that alignment is where most errors occur.

There are three ways to buy life cover in New Zealand, and they are not equivalent. You can buy direct from one insurer, which means you see one product range and one underwriting appetite. You can buy through your bank, which usually means a single insurer’s product sold under the bank’s brand, often with narrower definitions. Or you can go through an adviser, who quotes several insurers at once and is required to put your interests first.

The premium you pay is the same either way. Insurers build adviser commission into their pricing whether or not an adviser is involved, so going direct does not get you a discount — it just removes the person whose job is to argue your corner at application and at claim time.

• An adviser can see which insurer is currently taking your health history on standard terms, and which one will load or exclude it.
• An adviser can structure cover across two insurers if that produces a better outcome than putting everything with one.
• An adviser handles the underwriting back-and-forth, and is the person who chases the claim when a family is least able to.
• An adviser has to document why the recommendation suits you, which is a written record you can hold them to.

We are a referral service, not an insurer. We do not quote premiums and we do not sell policies. What we do is put you in front of one licensed New Zealand adviser who can compare the market properly.

1. 1

   You tell us what you are looking at

   The form takes about a minute. Nobody asks for your medical history on a web form — that conversation happens with the adviser, properly, and only once you have decided to proceed.

2. 2

   An adviser calls you

   A licensed New Zealand adviser talks through your situation: who depends on you, what you owe, what you already have in place, and what you are actually worried about.

3. 3

   They compare the market

   The adviser quotes across the major insurers, checks which of them will take your health history on the best terms, and puts the options side by side in writing.

4. 4

   You decide, in your own time

   There is no obligation and no cost to you. If the answer is that you already have enough cover, a good adviser will tell you that.