Conversion options

A conversion option is a right written into a policy to change it in a defined way without proving your health again. It sits alongside special events increases as one of the built-in protections against your own future medical history, and like them, it is used far less often than it should be.

The version most New Zealanders will meet is stepped to level. You took stepped cover at 32 because it was cheap, you are now 48, the premium is starting to climb steeply and you can see where it goes next. A conversion option lets you move onto level premiums without a new application — priced at 48, which costs more than starting level at 32 would have, but far less than being uninsurable.

The second version is the group continuation option. Employer-provided life cover ends when the employment does, and a great many people discover this only after they leave. A continuation option lets you take an equivalent personal policy without medical evidence, but only if you exercise it inside a short window from your last day.

Stepped to level

1. 1Confirm your policy actually contains the option, and the maximum age at which it can be used.
2. 2Ask the insurer to quote the level premium at your current age, to each available expiry age.
3. 3Compare that against the projected stepped cost to the age you expect to hold cover, modelled at more than 3% a year.
4. 4Check whether you can convert only part of the cover, which is often the affordable answer.
5. 5Confirm that existing loadings, exclusions and the original policy start date carry across.

Group scheme to personal policy

If you hold life or trauma cover through an employer scheme, ask the scheme administrator two questions now, not when you resign: does the policy include a continuation option, and how many days do I have to exercise it? The answer decides whether the cover you have relied on for a decade survives your next job change.

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

• The maximum age at which the conversion can be exercised — often the mid-fifties for stepped to level.
• Whether the whole sum insured must be converted or a portion can be.
• Whether the converted policy keeps the original policy start date for exclusion and disclosure purposes.
• The window on a group continuation option and who is responsible for telling you about it.
• Whether the personal policy available on continuation matches the group cover, or is a reduced version.
• Whether trauma and TPD benefits can be converted, or only life cover.

Every New Zealand insurer writes life insurance in new zealand 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.

• Conversion rights are not standard. Some insurers offer generous stepped-to-level conversion, others none at all — it is worth checking before you buy, not fifteen years later.
• An adviser can model conversion against a fresh application, since a healthy person may get better terms by reapplying than by converting.
• Group scheme continuation windows are short and employers rarely prompt you. An adviser reviewing at a job change will catch it.
• Partial conversion — level on the portion you will hold to 65, stepped on the mortgage portion — is often the best structure and rarely offered unprompted.

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.