The terminal illness benefit

The terminal illness benefit is not a separate product. It is a clause in the life policy that allows the sum insured — or a capped portion of it — to be paid while you are still alive, once a specialist certifies that your life expectancy is below the period the policy states. When it pays, the life cover reduces by the amount paid, so nothing extra is paid on death.

The reason it matters is timing. Money that arrives after a death pays for a funeral and clears debt. Money that arrives while someone is still alive pays for treatment that is not publicly funded, for a partner to stop working and be present, for travel to see family, and for the house to be made workable. Those are decisions with a short window.

The whole benefit turns on one number. A policy that requires a life expectancy under 12 months pays late in an illness, when the person is often too unwell for the money to change much. A policy that uses 24 months pays a year earlier. Both look identical on a premium comparison.

1. 1Your treating specialist provides a written prognosis stating expected life expectancy.
2. 2The insurer’s chief medical officer reviews the file, and may seek a second opinion or further records.
3. 3The insurer confirms the diagnosis falls inside the policy definition and that no relevant exclusion applies.
4. 4Any accelerated trauma or TPD benefit attached to the same life cover is adjusted, since paying the life sum insured reduces the pool.
5. 5The benefit is paid to the policy owner, not to a beneficiary — you are alive, so the money is yours to direct.

Note also the caps. Several insurers limit the terminal illness advance to a maximum dollar amount rather than the full sum insured, with the balance paid on death. On a large policy that cap can matter more than the life expectancy definition.

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

• Whether the definition requires a life expectancy under 12 months or 24 months.
• Whether the full sum insured is available early or only a capped amount.
• Who must certify the prognosis — the treating specialist alone, or with the insurer’s medical officer agreeing.
• Whether the benefit is available in the final years of the policy, since some wordings restrict it near expiry.
• What happens to accelerated trauma and TPD benefits when the terminal illness benefit is paid.
• Whether a suicide or non-disclosure exclusion period still applies in the first years of the policy.

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.

• The 12-month versus 24-month difference is one of the clearest ways to compare life policies, and it rarely shows up in a price table.
• Advance caps differ substantially between insurers on large sums insured.
• Where cover is being replaced, the terminal illness clause is one of the first things to check in the new wording.
• An adviser who has run terminal claims knows what medical evidence the insurer actually needs, which shortens the process at the worst possible time.

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.