Life insurance with no health questions

The honest position on this one is uncomfortable, so here it is first: for the large majority of people who search for it, cover with no health questions is the wrong product. It exists, it is legitimate, and there is a narrow group of people for whom it is genuinely the only option. Everyone else is paying a great deal to avoid a conversation they would have passed.

The reason is simple actuarial arithmetic. When an insurer asks no questions, it has to assume that a proportion of the people buying are buying precisely because they have been declined elsewhere. It prices for that assumption, and it protects itself with a stand-down period — commonly around two years — during which death from illness pays back your premiums rather than the sum insured. Accidental death is usually covered from day one, because accidents are not something you can select against.

Those two features, taken together, mean the product does very little for someone who is well. Pay for two years, die of an illness in month twenty, and the family gets your premiums back. Pay for twenty years on a small funeral policy and it is entirely possible to pay in more than the policy will ever pay out.

Nearly all no-questions cover in New Zealand is sold as funeral insurance. The shape is consistent.

• A small maximum sum insured, sized to a funeral rather than to a mortgage or a family’s living costs.
• Acceptance without underwriting, usually within an age band such as 50 to 80.
• A stand-down of around two years for death from illness, with accidental death covered immediately.
• Premiums that step up with age, sometimes sharply, and continue for as long as the cover runs.
• In some products, a cap that stops premiums at a certain age or guarantees the payout will be at least the premiums paid.

The alternatives, in the order worth trying

1. 1Apply properly. Most people who assume they will be declined are not declined. A condition that is stable and well managed is frequently accepted, sometimes at standard rates and often with a loading you can afford.
2. 2Ask an adviser to pre-assess anonymously. An underwriter can indicate likely terms without an application being recorded against your name.
3. 3Accept an exclusion. A policy that excludes one condition but pays for everything else is far better value than no-questions cover.
4. 4Consider a smaller underwritten sum insured. Underwritten funeral cover, or a small life policy, will usually beat guaranteed acceptance on price per dollar.
5. 5Set the money aside instead. For a small funeral sum, a separate savings account is sometimes simply better, particularly if you are healthy and years away from needing it.

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

• The stand-down period, and exactly what is paid if you die from illness inside it.
• Whether the payout is capped at a return of premiums in the early years, and for how long.
• Whether premiums stop at an age or continue indefinitely — some policies charge past the point of value.
• Whether the sum insured reduces with age while the premium keeps rising.
• The total you will have paid by your late seventies, compared with the sum insured. Do this sum before you sign.
• Whether an underwritten policy with an exclusion would give you more cover for less money.

Every New Zealand insurer writes how underwriting works 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 tell you honestly whether you are likely to be accepted for underwritten cover before you settle for a no-questions product.
• They can approach several underwriters informally with the same history, because appetite varies widely by condition.
• They know which insurers write underwritten funeral cover, which is usually far better value than guaranteed acceptance.
• If nothing underwritten is available, they can say so plainly rather than selling you the expensive option by default.

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.