Talking to a life insurance adviser

New Zealand’s financial advice regime changed substantially in recent years, and the practical effect for consumers is good. Anyone giving regulated financial advice must operate under a Financial Advice Provider licence, must be listed on the Financial Service Providers Register, and must put the client’s interests first. That last obligation is a legal duty, not a marketing line.

You are also entitled to disclosure. Before the advice is given, an adviser must tell you what licence they operate under, the scope of what they can advise on, which providers they can access, how they are paid, any conflicts of interest, and how to complain if it goes wrong. You can ask for all of it in writing and you should.

None of that guarantees good advice. What it does is give you a set of questions with answers you are entitled to receive, and a place to go if the answers turn out to have been wrong.

1. 1

   Scope and disclosure

   The adviser explains what they can and cannot advise on, which insurers they have access to, and how they are paid. Ask for the disclosure document if it is not offered.

2. 2

   Fact find

   Who depends on you, what you owe, what you earn, what you already hold, and what you are actually worried about. This is the part that determines whether the advice is any good.

3. 3

   Needs analysis

   Turning that into numbers — sums insured, benefit amounts, waiting periods, structure — and testing them against what you can afford to keep paying.

4. 4

   Research and comparison

   Quoting across the insurers the adviser can access, and checking which of them is likely to accept your health history on the best terms.

5. 5

   Written recommendation

   What is recommended, what it costs, what it does not cover, and why this option rather than the alternatives. Read it before you sign anything.

6. 6

   Application and underwriting

   Full disclosure, any tele-interview or medical evidence, then the insurer’s offer of terms. Nothing is in force until that offer is accepted and the policy issued.

7. 7

   Review

   A good adviser comes back. Diarise a review even if they do not.

Questions worth asking, in the first ten minutes

• Which insurers can you access, and are there any you cannot place business with?
• How are you paid on this — upfront commission, ongoing servicing commission, or a fee?
• Is there any clawback if I cancel in the first two years, and does that affect what you recommend?
• Will I get a written recommendation with reasons before I apply?
• Who handles my claim if I need to make one, and are you involved at that point?
• Which dispute resolution scheme do you belong to?

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

• Advice given without a written record of why the recommendation suits you.
• An adviser who can only access one insurer but does not say so.
• Any suggestion that you cancel existing cover before the replacement is issued and in force.
• Product recommendations made before anyone has asked what you already hold.
• Pressure to decide in the meeting. Nothing about this needs to be decided the same day.
• Vagueness about commission. You are entitled to a clear answer and it is not rude to ask.

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.

• An adviser can compare wordings, not just prices, and explain the two or three clauses that separate the shortlist.
• They carry the underwriting conversation, including pre-assessing a difficult history before any application exists.
• They are the person who chases the claim, at the point when the family is least able to.
• They document the reasoning, which is a record you can rely on later if the advice turns out to have been wrong.

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.