What a needs analysis actually is

A needs analysis is the fact-finding and reasoning process an adviser goes through before recommending anything. In practice it is a conversation and a document. The conversation covers your income, your debts, your dependants, your existing cover, your health history and what you are actually worried about. The document records the recommendation and — the part that matters — why it suits you.

It exists because of how financial advice is regulated here. Anyone giving regulated financial advice in New Zealand must do so under a Financial Advice Provider licence, must put the client’s interests first, must have a reasonable basis for the advice, and must be listed on the Financial Service Providers Register. A recommendation with no recorded reasoning does not meet that standard.

It also exists because sizing insurance well is a judgement call, and judgement calls should be written down. Five years from now, at review or at claim, the written rationale is the only record of what you were told and why.

1. 1A full picture of your position: income, debts, assets, dependants, employer benefits and existing policies.
2. 2The specific risks you are exposed to, expressed as events rather than products — you die, you cannot work for two years, you are diagnosed with cancer, you never work again.
3. 3A quantified gap for each risk, showing the arithmetic rather than asserting a number.
4. 4A recommended structure: which covers, what sums insured, which premium structure, and the reasoning for each.
5. 5What you are choosing not to insure, and the consequence of that choice.
6. 6The cost, and an honest view on whether you can sustain it as premiums change.
7. 7Disclosure of how the adviser is paid, which is required and should be given to you without you having to ask.

The questions to ask about your own

If you have been given a recommendation, these four questions will tell you quickly whether the reasoning behind it is real.

• Why this sum insured and not one twenty per cent lower — what specific liability makes up the difference?
• Which insurers did you compare, and why did this one win for my health history rather than in general?
• What did you decide I do not need, and why?
• What will this cost me at 55 and at 65 under the structure you have recommended?

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

• Whether the analysis was done before the product was chosen, or reverse-engineered to justify it.
• Whether existing cover was properly counted, including employer group life and older policies.
• Whether replacing an existing policy was considered, and whether the risks of replacing it — new underwriting, new exclusions, a fresh non-disclosure exposure — were spelled out.
• Whether the affordability of the premium over time was tested, not just today’s figure.
• Whether the adviser disclosed how they are paid and any limits on the insurers they can recommend.
• Whether you were given the document, or just told about it.

Every New Zealand insurer writes how much life insurance do you need 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.

• The analysis is where an adviser earns their fee, and the quality of it varies more than the quality of the products.
• An adviser who deals with several insurers can match your health history to the one most likely to accept it on standard terms.
• Replacement advice is the highest-risk advice in this market, and a good adviser documents the downside of switching before recommending it.
• You can check any adviser on the Financial Service Providers Register for free before you take advice from them.

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.