Yearly renewable term cover

A yearly renewable term policy is a one-year contract that renews itself. Each policy anniversary the insurer offers you another year of cover, and the offer is guaranteed — it cannot be withdrawn, restricted or repriced because of something that has happened to your health, your occupation or your pastimes since you applied. You accept the renewal by paying the premium.

That guarantee is the substance of what you buy. The lump sum matters when you claim, but the renewability is what stops the policy failing in the years when you need it most. A person diagnosed with a serious illness at 52 keeps their cover on exactly the terms they had at 32, because the insurer gave up its right to reconsider the day the policy was issued.

The name misleads people who have read overseas material. In the United States or the United Kingdom, “20-year term” usually means a contract that ends after twenty years, at which point you either reapply or go without. In New Zealand the cover keeps renewing to a maximum age, so the risk is not that your policy stops — it is that the price of renewing it eventually outruns your budget.

Very little visible happens, which is the point. But it is worth knowing the sequence, because it explains both why your premium moves and why the insurer does not ask you anything.

1. 1Your policy anniversary arrives. The insurer does not ask about your health, and you have no obligation to tell it anything.
2. 2The premium is recalculated. On stepped cover it moves to the rate for your new age. On level cover the age component does not move, but indexation and any policy fee changes still apply.
3. 3If indexation is switched on, your sum insured rises with CPI and the premium rises to match, usually priced at your attained age.
4. 4You are sent a renewal notice showing the new sum insured and the new premium. Paying it renews the contract.
5. 5Nothing else changes. The definitions, exclusions and benefits in your policy document continue exactly as issued.

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

• The maximum renewal age on your policy, which can differ between the life, trauma and TPD portions of the same plan.
• Whether the wording says the insurer “will” renew or “may” renew. That single word is the guarantee.
• Whether any rider attached to the policy has a shorter expiry age than the life cover itself.
• How the premium is recalculated at renewal, and whether the rate table is guaranteed or reviewable for a class of policies.
• Whether indexation is applied automatically at each renewal unless you decline it in writing.
• What the grace period is if a renewal premium is missed, and how reinstatement works afterwards.

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.

• Maximum expiry ages vary — the difference matters a great deal if you expect to hold cover past 70.
• Some insurers guarantee the rate table for a period and others reserve broader rights to reprice a class.
• Riders such as waiver of premium and children’s cover often expire earlier than the life cover, which can leave a gap you did not plan for.
• Where a policy is being replaced, an adviser can arrange for the old cover to stay in force until the new one is issued and any cooling-off period has passed.

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.