The cost of not having cover

Every household without cover is self-insuring, whether or not they think of it that way. The question is not whether you have a plan — it is whether the plan is “our savings and my partner’s income would handle it” and whether that is true.

For some households it plainly is. No debt, no dependants, assets that would cover the shortfall. For others it plainly is not: a mortgage that needs two incomes, children who are years from independence, and three months of savings.

What makes this hard to think about is that the cost of not having cover is invisible until it is not. There is no bill. There is just a household that either absorbs an event or does not.

That table is the single most important thing on this page. New Zealand has an accident scheme, not a sickness scheme. Most long-term income loss is caused by illness, and for illness the household is on its own unless it has insured itself.

When going without is the right call

• Your assets exceed the loss. If you could write the cheque, insuring against it is a poor trade.
• There is nobody to protect. No dependants, no joint debt, no guarantee given for anyone else.
• The premium would be so high that you would cancel within a few years anyway, leaving you with neither cover nor savings.
• The product on offer does not actually cover the risk you are worried about — a narrow policy is not better than none, it is just more expensive than none.

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

• Whether your plan for a death or a long illness has ever been said out loud, or just assumed.
• Whether you are counting on ACC for an illness risk. It does not cover illness.
• Whether you are counting on assets that are not liquid — the house, KiwiSaver, a business share.
• Whether employer cover is doing the work, and what happens to it if the job ends.
• Whether a health change would make cover harder to get later, which is the cost of waiting.
• Whether the decision to go without was made, or simply never made.

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.

• An adviser will tell you when you do not need cover, which makes the answer worth more when they say you do.
• Where the budget is tight, structuring partial cover against the largest risk is more useful than an all-or-nothing decision.
• Knowing which insurer will accept a health history determines whether waiting is a real risk for you specifically.
• An adviser can quantify the shortfall against ACC for your own occupation and income, which is where most people’s assumptions are wrong.

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.