Life insurance and your will

People assume their will is the master document — that whatever it says, everything follows. It is not. A will governs the estate: the assets you own personally at death that do not pass some other way. Assets held jointly, assets in a trust, and insurance directed to a nominated beneficiary generally pass outside the estate and outside the will.

So the first question for any life policy is which side of that line it falls on. If there is a valid nomination, the insurer generally pays the nominee, and the will is irrelevant to that money. If there is no nomination, the proceeds usually go to the estate, become an estate asset, and are dealt with by the will along with everything else — after the estate’s debts and administration costs are met.

Neither answer is automatically better. What is always bad is not knowing which one applies to you, because the two produce very different outcomes for very different people.

There are genuine reasons to direct proceeds into the estate. If you want the money divided across several beneficiaries in unequal shares, held in a testamentary trust for young children, or applied first to clearing debts so that a property passes unencumbered, a will can do that with a precision a nomination form cannot.

There are equally genuine reasons not to. If the estate carries significant debt, if you expect the will to be contested, or if the household simply needs money quickly to keep paying a mortgage, a nomination gets the money to the right person faster and cleaner.

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

• Whether each policy has a current nomination, and who it names.
• Whether your will assumes insurance money will arrive in the estate when it will not.
• Whether the estate will have enough liquidity to pay debts if insurance bypasses it.
• Whether a testamentary trust in the will is intended to receive insurance proceeds, and whether the nomination reflects that.
• Whether the executor knows the policies exist and which insurers hold them.
• Whether a family protection or relationship property claim against the estate is a realistic possibility.

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.

• An adviser will ask what your will says before setting up nominations, which is the step that stops the two contradicting each other.
• They can structure cover so the estate has liquidity where the will needs it, rather than starving it by nominating everything away.
• They keep a record of policies and nominations that an executor can actually find.
• They will refer you to a solicitor where the answer belongs in a will rather than on an insurance form.

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.