Redundancy cover

Redundancy insurance exists because the risk is real: households lose income to restructures and closures far more often than to serious illness. The reason it is not widely held in New Zealand is that the product is difficult to write. Redundancy risk is correlated — when a recession arrives, everyone claims at once — and it is partly within the insured’s control, which is a bad combination for an insurer.

The response is a heavily conditioned product. There is a qualifying period before the cover becomes active, an employment history requirement, exclusions for anything foreseeable, and a short benefit period. A policy that pays three or six months of mortgage repayments after nine months of premiums is a modest promise, and it needs to be understood as one.

That does not make it useless. Three months of mortgage repayments while you find another job is a real benefit for a household with no savings buffer. It simply is not income protection, and it should not be relied on as a substitute for the illness and injury cover that carries the far larger financial risk.

• A qualifying period, commonly six months from the start of the policy, during which no claim can be made.
• A requirement to have been in continuous permanent employment, often for at least twelve months, and usually working a minimum number of hours.
• Exclusion of redundancy that was announced, foreseeable or under consultation when you applied.
• Exclusion of resignation, retirement, dismissal for misconduct or performance, and usually voluntary redundancy.
• Exclusion of the end of a fixed-term contract, seasonal work and self-employment.
• A requirement to be actively seeking work and registered as available, with evidence.
• A benefit period that is short, commonly three to six months, and a maximum number of claims.

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

• The qualifying period before cover becomes active.
• The minimum employment history and hours required to be eligible.
• How the policy defines involuntary redundancy, and whether voluntary redundancy is excluded.
• The benefit period, the monthly maximum, and how many claims are allowed.
• Whether the benefit is offset against other income, including a redundancy payment from your employer.
• Whether eligibility ends if you change jobs, and whether a new qualifying period then applies.

Every New Zealand insurer writes mortgage protection 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.

• Availability is limited and terms differ; an adviser can tell you who is currently writing it rather than what was available previously.
• For self-employed and contract workers, redundancy cover is generally not available at all — building a cash buffer is the honest alternative.
• Where a waiver of premium with a redundancy provision is included on an existing policy, that may already provide part of the protection.
• An adviser will normally recommend income protection and mortgage cover ahead of redundancy cover, because the financial risk is larger and the product actually pays.

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.