What life insurance costs

Insurers price life cover on the probability that they will have to pay a claim while the policy is in force, and on how large that claim would be. Everything on the application form feeds one of those two questions.

Notice that only three of those are in your control, and one of them — premium structure — is the one most people never consciously choose.

Read the shape rather than hunting for your own price: what matters is how steeply the cost climbs with age, and how far apart insurers land on the same cover.

Fifteen years of age can close to double the premium on identical cover. That is the compounding you are buying into when you defer a decision, and it is the single strongest argument for taking cover earlier rather than later.

Add smoking to age and the number changes order of magnitude. It combines the two most expensive factors in the market — age and smoking — and the result is a premium that most households simply will not keep paying. This is the table to look at before deciding that quitting is not worth the effort.

How much cover you buy moves the premium almost proportionally — which makes it the lever most people actually have.

Two things stand out. Doubling the sum insured does not quite double the premium — the fixed policy fee is spread over more cover, which is why larger sums insured are proportionally better value. And the jump from 40 to 50 is far larger than the jump from 30 to 40, which is the age curve doing what it always does.

For a 40-year-old male taking $1 million of cover that is about $234 a year — every year the policy runs.

Over a policy held for 25 years, and rising with age, that gap is a substantial sum of money for an identical promise. It is also the single clearest argument for comparing the market rather than buying from whoever asked first.

Almost every New Zealand life policy is sold on one of two premium structures. Stepped is recalculated against your age each year. Level is fixed to a chosen expiry age.

Stepped premiums in New Zealand typically rise somewhere between 2% and 15% a year, mostly driven by age. Modelling that assumes a flat 3% understates the long-run cost of stepped cover — ask your adviser to model your own policy at 8–10% as well as 3%, and to show cumulative cost rather than the annual figure.

• Policy fees, which each insurer applies differently and which weigh most heavily on small sums insured.
• First-year and healthy-lifestyle discounts, which can move the effective price substantially in year one and then unwind.
• Multi-benefit discounts for holding several covers with one insurer.
• Loadings for health history, weight, blood pressure or family history — anything from nothing to well over half again.
• CPI indexation, which increases both your sum insured and your premium every year unless you decline it.
• The cost of the riders most policies are actually sold with, such as waiver of premium or a trauma add-on.
• The frequency loading many insurers apply if you pay monthly rather than annually.

Any of those can move your real premium a long way from a table figure. That is not a criticism of the tables — it is what a table is for. It is a reason to treat a published comparison as the start of the process rather than the end of it.

Every premium figure on this page is a published market example, collected from a named source on a named date. We do not run a quote engine, we do not adjust the numbers, and we do not receive anything from an insurer for where they sit in a table. Here is exactly what these figures are.

• There is no neutral published table that ranks New Zealand life insurers on price. Insurers do not release comparable rate cards, and the order changes with age, smoking status, occupation and health history. The only figure that means anything is the one your own application produces.
• New Zealand insurers do not publish rate cards you can lay side by side, so no public table ranks them honestly on price. Which insurer is cheapest moves with age, smoking status, occupation and — most of all — health history. Your own application is the only thing that settles it.
• Both sets are quoted before discounts. Healthy-lifestyle, membership, multi-benefit and first-year discounts are all excluded, and any of them can move the number materially.
• Both assume a clean health history. A loading for weight, blood pressure, mental health history or family history can add anywhere from a small percentage to well over half again.
• Neither reflects how each insurer treats the policy fee, which matters more on small sums insured than on large ones.
• Rates change. An insurer that leads a table this quarter can sit mid-pack the next, which is the whole argument for re-quoting rather than trusting a table.

Treat these figures as the shape of the market, not as your price. The only number that is yours is the one an insurer puts in writing after it has seen your health history.

Every New Zealand insurer writes life cover 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.

• Insurer rankings on price move quarter to quarter, and the cheapest insurer for a clean 30-year-old is often not the cheapest for a 48-year-old with a health history.
• Loadings are shoppable. The same blood pressure history can attract a loading from one insurer and standard rates from another.
• Multi-benefit and package discounts change which insurer is cheapest once you are buying more than one cover.
• Splitting cover between level and stepped inside one policy is a structuring decision that few people make on their own.
• An adviser can tell you when your existing policy is better than anything currently on sale, which is not a conclusion a comparison site reaches on its own.

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.