Life insurance for high net worth families

Most life insurance is underwritten on health. Above a certain sum insured — and the threshold differs between insurers — it is also underwritten on money. The insurer wants to understand why this amount, and whether it is proportionate to what you actually earn and own. That means financial statements, tax returns, business valuations, evidence of shareholding, and sometimes a conversation with your accountant.

This is not obstruction. Insurers control anti-selection by making sure a sum insured bears a defensible relationship to the loss it is meant to cover. It does mean that a large application is a project rather than a form, and that arriving with the evidence assembled shortens the process considerably.

Behind the scenes there is a second constraint. Each insurer retains only part of any large risk and reinsures the rest, and reinsurers apply their own limits across the market. Above a certain point a single insurer cannot take the whole case, which is why very large covers are sometimes layered across two or more companies. That is a normal structure, not a sign that something has gone wrong.

Estate equalisation

The most common reason a New Zealand family needs a large policy is that its principal asset cannot be divided. A farm, a business, a commercial building. One child works in it and will inherit it; the others should receive something comparable; the asset cannot be sold without destroying the thing everyone wants preserved.

Insurance solves that by creating cash where there was none. The sum insured is set by the valuation, which makes it easy to justify to an underwriter, and the policy is usually owned by a trust or by the beneficiaries so the money does not pass through an estate that may be contested. It is one of the few situations in which a very large permanent policy is unambiguously the right instrument.

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

• How much existing cover you hold across all insurers, since aggregation limits apply market-wide.
• Whether ownership should sit with you, a trust, a company or the intended beneficiary, and the tax consequences of each.
• Whether business-owned cover creates a tax outcome you did not intend at claim.
• Whether the sum insured needs to be indexed, since a valuation set today will be wrong in ten years.
• Whether a level structure to a late expiry age is appropriate, given this cover is meant to be held until death.
• Whether the shareholders’ agreement, the will and the policy ownership all describe the same outcome.

Every New Zealand insurer writes large sums insured 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.

• Pre-assessing a large case with several insurers before any formal application exists.
• Assembling financial evidence in the form underwriters expect, which materially shortens the process.
• Structuring a layered placement across insurers where one cannot take the whole risk.
• Coordinating with your accountant and lawyer so ownership, tax treatment and the estate plan agree.

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.