Insurance through your employer

Employer-arranged insurance is one of the better benefits in the New Zealand market and one of the least understood by the people who have it. A group scheme insures a defined population — everyone employed by the company, or everyone in a particular grade — under a single master policy negotiated by the employer, usually with limited or no individual underwriting up to a free cover limit.

That last feature is what makes group cover valuable beyond its face value: people who would be loaded or declined individually are often covered under a group scheme without medical questions, because the insurer is pricing the population rather than the person.

The corresponding weakness is structural. The employer owns the arrangement. The employer chooses the multiple, the waiting period and the benefit period. The employer can change the scheme or move insurers. And when your employment ends — resignation, redundancy, retirement, or a restructure — the cover ends with it, usually immediately.

Group life

Typically a lump sum expressed as a multiple of your base salary — one, two or four times is common, though the multiple is the employer’s choice. It usually pays to your estate or a nominated beneficiary. Because it is a multiple of salary rather than a needs calculation, it rarely bears any relationship to your mortgage or your dependants.

Group income protection

A monthly benefit expressed as a percentage of salary after a waiting period, commonly with a benefit period shorter than to age 65. Schemes vary widely: some pay for two years, some to 65, some only while you remain employed. That last condition matters — a benefit that ceases when employment ends is a very different product from a personal policy.

What to find out about your own scheme

1. 1The exact multiple or percentage, and whether it is calculated on base salary or total remuneration.
2. 2Whether there is a free cover limit and whether your cover sits above it — cover above the limit is individually underwritten and may not be in place.
3. 3The waiting period and benefit period on any income protection benefit.
4. 4Whether the income protection benefit continues if your employment ends while you are on claim.
5. 5Whether a continuation or conversion option exists on leaving, what it offers, and how many days you have to exercise it.
6. 6Who pays the premium and how it is treated for tax — this affects whether a benefit is taxable in your hands.

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

• The multiple is set by your employer’s budget, not by what your family would need.
• Cover generally ends on your last day of employment, including on redundancy.
• Cover above a scheme’s free cover limit may require individual underwriting and may not actually be in force.
• Group income protection benefit periods are often shorter than personal cover, which changes what you are protected against.
• Employer-paid premiums can create fringe benefit tax consequences, and benefit taxation depends on who paid.
• Schemes change. An employer can reduce the multiple or move insurers at renewal without your agreement.

Every New Zealand insurer writes the complete guide to life insurance 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 subtracts group cover accurately from your gap, rather than assuming a round number.
• They can check whether a continuation option exists and diarise the deadline if you are leaving.
• They can structure personal cover to sit alongside a scheme without duplicating what it already does.
• Where a health history makes personal cover difficult, they can advise on preserving group cover value before it lapses.

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.