The cost of $2 million of life insurance

Very few New Zealand households need $2 million of personal life cover. The people who do generally fall into one of three groups: business owners with a buy-sell agreement or a personal guarantee behind a company facility; families whose wealth is concentrated in an illiquid asset like a farm, where the estate needs cash to equalise between children; and high earners with a large mortgage and long-dependent children.

If you are in one of those groups, the amount is not extravagant — it is the size of the obligation. If you are not, it is worth asking hard what the money would actually do, because a premium this size is a long-term commitment.

As with any large sum insured, cost per dollar of cover is efficient. The complexity is in the application and the structure, not the price list.

Notice how few of those rows are answered by a premium comparison. At this level the policy is one component of an arrangement that includes an agreement, an ownership structure and often a tax position. Getting the cheapest premium and the wrong owner is a poor trade.

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

• Whether the sum insured matches the agreement it is meant to support, and whether that agreement is current.
• Whether the policy owner is the person or entity that will actually need the money.
• Whether the premium is deductible and the proceeds taxable, which depends on the ownership and purpose.
• Whether the amount can be written by one insurer, or needs to be split.
• Whether cross-ownership between business partners has been documented properly.
• Whether the cover is reviewed when the business is revalued, which most people forget to do.

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.

• Matching cover to a buy-sell agreement is specialist work, and mismatches between the two are common.
• An adviser coordinates with your accountant and lawyer so the tax treatment and the ownership line up.
• Reinsurer referral is normal at this level and an adviser manages the timeline and the evidence.
• Where cover is split across insurers, someone has to keep both applications and both underwriting processes aligned.

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.