The cost of $250,000 of life insurance

$250,000 is the level people land on when they want cover and are anchored on the premium rather than on the need. That is not automatically wrong — cover you can afford beats cover you cancel — but it is worth being clear about what the amount does and does not do.

Against a New Zealand household with a current first mortgage, $250,000 usually will not clear the debt. What it will do is cover funeral and estate costs, remove smaller debts, and give a surviving partner a year or two of breathing room. That is a real outcome, and for some households it is the right one.

Where $250,000 works well is as a layer. A household with $600,000 of level cover on the main earner might add $250,000 on the second earner, or add a $250,000 stepped layer that is only needed until a specific loan is repaid.

Sums insured do not price in a straight line, and understanding why changes how you buy.

• Most insurers charge a fixed policy fee on top of the risk premium. That fee is the same whether you insure $250,000 or $1 million, so it makes up a bigger share of a small premium.
• Some insurers apply volume discounts at higher sums insured, which pushes the cost per dollar of cover down as the amount rises.
• Underwriting requirements step up at higher sums insured — more medical evidence, financial evidence — but that affects the process, not usually the rate.
• The practical effect is that $250,000 is the most expensive band per dollar of cover, and $1 million is better value per dollar than $500,000.

That does not mean you should buy more than you need. It does mean that if you are choosing between $250,000 and $400,000 on price alone, the difference is often smaller than you expect — so get both quoted before you decide.

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

• Whether the policy fee is charged per policy or per benefit — it changes the maths on small sums insured.
• Whether you are being sold $250,000 because it fits a premium target rather than because it fits the need.
• Whether indexation will lift the sum insured over time, and whether you want it to at this level.
• Whether a funeral-specific product would be cheaper if the money is only for final costs.
• Whether a second, larger layer could be added later without new underwriting under a special events benefit.

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.

• Policy fee treatment differs between insurers and matters most at this end of the market.
• Where a household is buying two small policies, structuring them with one insurer can avoid paying two policy fees.
• An adviser can price several sums insured at once so you see the actual cost of each step up.
• If the amount is being driven by affordability, an adviser can look at whether a different structure gets you more cover for the same money.

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.