Standalone vs accelerated trauma cover

The difference is what a claim does to the rest of your plan. Accelerated trauma sits inside your life cover as a right to take part of it early. Hold $700,000 of life cover with $200,000 accelerated trauma, claim the trauma benefit, and you have $200,000 in hand and $500,000 of life cover remaining. Nothing extra was created; the payment was brought forward.

Standalone trauma is its own contract with its own sum insured. Claim $200,000 on it and your $700,000 of life cover is still $700,000. The insurer is carrying two separate risks, so you pay for two.

Neither is right in the abstract. The question is whether the life cover would still be needed after a trauma claim, and how likely it is that the person claiming will die soon afterwards. In many serious illnesses the honest answer is that both remain relevant, which is why the buy-back option exists.

The buy-back is the provision that resolves most of the tension. It gives you the right, typically twelve months after an accelerated trauma claim, to reinstate the life cover the claim reduced, without any new medical evidence. The premium restarts on the reinstated amount at your then age. Some insurers include the option at no cost, some charge for it, and some do not offer it — that is worth knowing before you choose between the two structures.

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

• Whether a buy-back is available, what it costs, and how long after the claim it can be exercised.
• Whether the buy-back reinstates the full amount claimed or only part of it.
• Whether the buy-back requires you to be alive and, on some wordings, not terminally ill at reinstatement.
• Whether the accelerated benefit reduces any TPD benefit attached to the same life cover as well.
• Whether standalone trauma includes any death benefit at all — many do not, or only a small one.
• How each structure is treated if you later want to reduce or restructure the plan.

Every New Zealand insurer writes trauma 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.

• Buy-back terms are one of the least standardised features in the New Zealand market and rarely surface in a price comparison.
• Splitting cover — part accelerated, part standalone — often gives the right protection at a manageable price.
• Where life cover exists for a business purpose, keeping trauma standalone protects the business arrangement from being undermined by a personal claim.
• An adviser can model what your plan looks like the day after a claim under each structure, which is the only comparison that answers the question.

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.