Loss of independence cover

Activities of daily living are the standard clinical shorthand for the basic tasks of looking after yourself: washing, dressing, eating, using the toilet, moving between a bed and a chair, and continence. A loss of independence benefit pays when illness or injury permanently leaves you unable to perform a stated number of them — usually two or three — without physical assistance from another person.

It appears in two places. As a listed condition on a trauma policy, it covers severe permanent impairment that is not otherwise captured by a specific medical definition. And as a TPD definition, it is what many New Zealand policies convert to at a stated age — commonly 60 or 65 — replacing the occupational test that applied before.

That conversion is the part people miss. Someone who bought own occupation TPD at 40 may find that at 65 the policy no longer asks whether they can do their job, but whether they can dress and bathe themselves. It is not a defect; it reflects that occupational tests stop being meaningful once someone has retired. But it is a substantial narrowing, and it happens without anyone writing to remind you.

1. 1The claim identifies which activities of daily living can no longer be performed without assistance.
2. 2Medical evidence, and often an occupational therapy or functional assessment, establishes the extent of the impairment.
3. 3The insurer checks whether the required number of activities — usually two or three — is met.
4. 4Permanence is assessed, including whether treatment, rehabilitation or aids could restore capacity.
5. 5The benefit is paid as a lump sum where the policy definition is satisfied.

Note the phrase “without assistance”. Most wordings turn on whether you need help from another person, not on whether the task is difficult or slow. The availability of aids and equipment can also be taken into account, which is one of the reasons these claims are assessed functionally rather than on a diagnosis.

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

• How many activities you must be unable to perform, since two is a much lower bar than three.
• Which activities are on the list — continence and mobility are not on every one.
• Whether assistance means physical help from a person, or includes the use of aids and equipment.
• The age at which an occupational TPD definition converts to this test.
• Whether loss of independence appears as a trauma condition, a TPD definition, or both on your plan.
• Whether the benefit is payable in addition to, or instead of, other benefits in the plan.

Every New Zealand insurer writes tpd 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 number of activities required and the composition of the list vary between insurers and are rarely compared.
• The conversion age for TPD definitions differs, and for someone planning to work past 65 that difference is material.
• Where cover is being held into later life, an adviser can weigh whether TPD premiums still buy useful protection after the definition changes.
• Loss of independence is one of the few benefits that remains relevant after retirement, which affects how a plan should be trimmed rather than cancelled.

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.