Life insurance when you rent

The insurance industry organises its thinking around mortgages because that is where the largest sums insured are. If you rent, none of that applies directly and it is easy to conclude that you have nothing to protect. The conclusion is wrong for a simple reason: renting does not reduce your housing cost, it just changes who you owe it to, and a landlord is considerably quicker to act on non-payment than a bank.

The other thing renting removes is the buffer. A homeowner who cannot work has equity, which is not liquid but is real — they can refinance, sell, or borrow against it. A renting household that loses an income has savings and then nothing. That makes the income the whole structure, and it makes income protection the cover that carries the most weight.

There is also a timing argument. People who rent are on average younger, and premiums are set by the age and health you have when you apply. Cover bought at 28 while renting is cheaper for the whole life of the policy than the same cover bought at 35 with a mortgage, and it protects you against becoming uninsurable in between.

1. 1Add up your fixed monthly costs: rent, power, insurance, transport, food, any loan repayments.
2. 2Work out how many months your savings would cover those costs with no income. That number sets your income protection waiting period.
3. 3Insure the income to cover the rest, with a benefit period long enough to matter — short benefit periods fail on the claims that last.
4. 4Decide whether anyone would be worse off if you died. A partner who could not afford the flat alone, children, or a guarantor all count.
5. 5Size life cover to that gap, plus final expenses. It is often modest.
6. 6Add trauma cover if there is room, because a diagnosis creates costs before an income protection benefit starts paying.

Do not confuse contents insurance with any of this. Contents cover replaces your possessions. It does nothing about the income that pays your rent, and the two are frequently muddled when people say they “have insurance”.

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

• Whether your income protection waiting period matches the savings you actually hold, which for renters is the whole safety net.
• Whether a tenancy is in joint names, which makes flatmates or a partner liable for the full rent if you stop paying.
• Whether any employer-provided cover exists, and that it stops when you leave the job.
• Whether your KiwiSaver first-home withdrawal plans change what you should insure — buying is a review trigger.
• Whether a partner or family member has guaranteed any debt of yours.
• Whether the policy allows increases on buying a home without new medical evidence.

Every New Zealand insurer writes income and life cover for renters 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.

• Recommending the smaller life sum insured that actually fits, and putting the budget into income protection instead.
• Setting waiting and benefit periods against a real household budget rather than a default.
• Choosing a policy with the increase options that will matter when you buy.
• Reviewing at the point of purchase so cover steps up rather than being started from scratch.

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.