Choosing your life insurance provider and amount
Life insurance providers in New Zealand include both companies, and banks. You might also find life insurance offered through your employer. When you’re thinking about choosing a provider and an amount you should be insured for, make sure you take your time and pick a policy and a provider who is right for you. It’s common to get an insurance adviser who specialises in life insurance for this type of policy, but it can also be helpful to do some research at home first.
Selecting your amount
As a rule of thumb, you should make sure you select enough money to take care of your dependents until they’re able to take care of themselves, to cover your funeral costs and to settle your debts. Someone who has a partner who cannot work, or who has a young family completely dependent on them will usually choose a much higher amount than someone with an independent, adult family. The cost of your children and partner's day-to-day living, such as food, clothing, household expenses and educational or extracurricular costs can all be factored into the cost of life insurance.
One popular way people calculate their insurance while their children are still at school is insuring for ten times the amount of the salary of the highest earner: if the major breadwinner in the household is earning $65,000 a year, their policy would be for $650,000. Everyone’s circumstances are different however, and you might want to provide for your family for a longer period of time.
If you can see costly events on the horizon - such as your children starting university, getting married and starting a family of their own, or needing a deposit for a first house - it may be a good idea to bump up the amount! Your mortgage is also something to take into account. Quashed provides a free life insurance calculator, which can be accessed by signing up to our free platform today. For more general information about life insurance, you can explore life insurance on our platform.
Term insurance
In the past, whole-of-life insurance policies were available, but life insurance in New Zealand is currently only available on a term basis. Term insurance means the life assured is covered for the term of the policy (which might be 10 or 20 years). If the life assured dies or become terminally ill within this period of time, the policy owner will be able to claim.
If you choose a yearly stepped premium structure, your premiums will grow more expensive each year. Other common forms of premium structures are level (remaining the same for the duration of the policy) and stepped (increasing after a specified period of time). Level premium structures are generally more expensive to begin with, but stepped premiums can become more expensive over time.
Before getting your policy, make sure you have a basic understanding of what you will be paying in the long-term. You don’t need to pick a sum and stick with it – whenever you review your insurance policy, you should be thinking about what your family’s needs are at that point in time.
If you do want to change your insurance policy, or cancel it and take out a new one, it's best to get some advice first to make sure you don't lose any benefits. It's also important to note that no matter how much money you have put into your insurance policy in the preceding years, the amount paid out to your loved ones on your death always depends on the current terms of your policy.
Banks vs insurance companies
Generally, the advice banks give on insurance is limited: if you are interested in this option, you can sometimes use online calculators to work out how much you will end up paying, and banks also usually encourage you to talk to an in-house specialist. If you go to an independent insurance adviser however, they will be able to provide you with a far more in-depth overview of the type of cover available to you, and other potential options available out there.
Remember you can always talk to your adviser about the different insurance options you’ve seen online and ask them to dig deeper into what those banks or companies are actually offering. Check for package deals, for instance offering mortgage protection, trauma, total permanent disability and redundancy insurance.
Life insurance providers
All life insurance companies in New Zealand are regulated by the Reserve Bank of New Zealand and need to meet the bank's solvency standards; companies generally display their solvency margins online. When you choose a life insurance provider, it's best to pick one who will stay around and pay out your insurance policy after you pass away. Companies will generally display their annual financial strength rating (updated every year) from specialised financial rating companies, such as AM Best or Standard and Poors, on their websites. A rating of A or higher (e.g. A++, or AA) denotes excellent capacity to carry financial commitments. B usually means a company is stable while a rating of C or lower suggests weak or poor performance.
Many companies offer life insurance, but here are some of New Zealand’s most popular insurance providers along with their 2021 financial ratings:
Pinnacle Life: Pinnacle Life offers discounts to people who apply online, and quotes and products such as life cover, critical illness cover, income protection and disability cover as well as advice are available via this insurer's website. (B "fair", AM Best)
Cigna: Cigna provides quotes for life cover and offers you the option of talking directly to the company or speaking to an insurance adviser when it comes to related forms of insurance. (A "Excellent", AM Best).
Asteron Life: Offers life cover, funeral benefit, terminal illness benefit, grief support and financial planning for your relatives. Asteron does not give online quotes, but can put you in touch with an insurance adviser. (A+, "Excellent" Standard and Poor's).
Fidelity: Fidelity offers life cover, income protection, mortgage protection, total permanent disability cover, and trauma cover. Fidelity can also put you in touch with an adviser. (A-, AM Best).
Partners Life: Partners Life offers advice from an independent insurance adviser: the products the company sells include a range of policies to replace lost income, reduce debt burden, and cover unexpected costs. Along with more general types of life and health-related cover, Partners Life offers specific condition cover (for instance you can be insured against breaking a bone). (A-, AM Best).
And here are some major Kiwi banks that offer life insurance:
Westpac: Life and income insurance. Westpac provides an online calculator, giving you an instant estimate. (AA-, Standard and Poor's).
BNZ: Life insurance and related cover such as redundancy and TPD (total permanent disability) as well as temporary disability and critical health care. Standard cover includes death/terminal illness, bereavement support (in the immediate aftermath) and child death cover benefit (for children of the insured). More details are available on the bank’s website. (AA-, Standard and Poor's).
ANZ: Life and living insurance are provided through Cigna. Online quotes are available. (A-, Standard and Poor's).
Kiwi Bank: Income protection, serious illness trauma, life insurance and funeral expenses. The bank provides an “estimator”. (AA, Fitch).
ASB: Life, loan and income protection insurance. You can get an online quote for ASB term life. (AA-, Standard and Poor's).
Premiums
Premium prices and packages vary widely between insurers, and the amount you pay also depends on your gender, age and whether you smoke. Many policies have perks - watch out for cashback options in the first year of your policy, and companies that offer you a month or several months premium free! Insurers usually allow you to pay your premiums fortnightly, monthly or annually. Policy premiums are usually either stepped (increasing every year until the policy ends) or level (remaining the same every year for the duration of the term policy).
According to Life Direct:
A 32-year-old male smoker can expect to pay between $375 and $475 a year for a $500,000 life insurance policy in New Zealand, using a stepped premium structure that will increase over time. Cigna offers the lowest premium, while PartnersLife offers the highest (with a cashback amount of $142).
A 33-year-old, non-smoking female can expect to pay $250 to $375 every year for a policy worth $500,000. Fidelity offers the lowest premium, while Partners Life offers the highest (with a cashback of more than $100).
A 40-year-old male smoker will pay between about $1000 and $1250. Cigna offers the lowest premium, while Fidelity Life offers the highest (both options offer cashbacks of more than $300).
A 48-year-old female smoker can expect to pay between $1675 and $1820. AIA offers the lowest premiums and Asteron Life has the highest (both options come with cashbacks of more than $500).
Next steps: getting an insurance adviser
To get some comprehensive advice on how much you should insure your life for, and which providers and policies would suit you and your family best, seeking the advice of a qualified insurance adviser is a fantastic idea. Whenever you engage an insurance adviser, it's best to check that they are available to advise you on a range of products and companies, so you're seeing an accurate reflection of what the market is like.
Insurance advisers will talk to you about your stage of life, your income, and your financial goals, and give you some advice on which providers and policies might suit you best: don't be afraid to challenge your insurance adviser and drill down into why they've given you a particular recommendation.
As part of our service, Quashed offers a hassle-free, no-strings-attached, chat with an experienced insurance adviser who has been in the industry a long time. Our advisers are here to show you the options out there that might suit you, and will not pressure you to buy anything.
If you’re interested in learning more about life insurance, check out Quashed’s guide here- and when you get a policy, be sure to upload it to Quashed! Quashed's free online platform lets you see all your policies in one place.
