Do I need life insurance?

Life insurance answers one question and only one: what happens to other people’s money if you die. It does nothing for you. So the test is not whether you feel exposed, it is whether somebody else is exposed to your death, in dollars.

That framing rules a lot of people out, and it should. A single person with no dependants, no shared debt and no business guarantee does not need life cover, and any adviser telling them otherwise is selling rather than advising. What that person may well need is income protection, because being unable to work for two years would wreck them, and trauma cover, because a serious diagnosis costs money whether or not you die of it.

It also rules some people in who assume they are out. A stay-at-home parent with no income is frequently the largest uninsured exposure in a household, because the work being done would have to be paid for at market rates.

Cover you may already have

• Employer group life, often a multiple of salary. It ends when the job ends and is not portable.
• An older personal policy taken out at a mortgage settlement and forgotten.
• Cover attached to a credit card or a loan, which is usually narrow and sometimes duplicated.
• Your KiwiSaver balance, which is paid to your estate and is real money even though it is not insurance.
• A partner’s policy, which may or may not name you as beneficiary — worth checking rather than assuming.

The five-minute version

1. 1List everyone who would be financially affected. If the list is empty, stop — you probably do not need life cover.
2. 2List the debts that would have to be paid or serviced.
3. 3Decide how many years of income would need replacing, and for whom.
4. 4Subtract cover you already have, including through work.
5. 5If there is a gap, that is your answer. If there is not, review again after your next life event.

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

• Employer cover creates a false sense of security. Check the multiple, and remember it ends with the job.
• Joint mortgages create exposure even without children, and it is the most commonly missed one.
• Beneficiary nominations after a separation or remarriage are wrong far more often than people expect.
• Cover on only the higher earner leaves a household exposed to losing the other adult’s unpaid work.
• Buying cover for children is rarely about income replacement, so be clear what problem it is solving.
• If you decide you do not need cover, diarise a review. The answer changes with a mortgage or a baby.

Every New Zealand insurer writes life insurance in new zealand 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.

• A good adviser will tell you when the answer is no, and will document the reasoning.
• They can quantify the replacement cost of unpaid household work, which most people underestimate.
• They can check whether existing employer or bank-attached cover actually does what you assume.
• They will sequence products by likelihood of claim rather than by what you walked in asking about.

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.