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Secure Your Family's Future

How Life Insurance Provides Essential Financial Protection

Life insurance is a cornerstone of financial planning in New Zealand, offering a crucial safety net for families. At its core, life insurance is a contract between an individual and an insurer. The insurer commits to pay a specified sum to designated beneficiaries upon the death of the insured person, in exchange for regular premium payments.

The importance of life insurance in securing a family's financial future cannot be overstated. In the event of an unexpected death, life insurance can help maintain the family's standard of living, cover outstanding debts, and provide for future expenses such as education costs. It offers peace of mind, knowing that loved ones will be financially protected even in the most challenging circumstances.

Understanding Life Insurance in New Zealand
The New Zealand life insurance market offers a variety of policy types to suit different needs and circumstances:

Types of life insurance policies available

Term Life Insurance
Term Life Insurance

This is the most straightforward and often the most affordable type of life insurance. It provides coverage for a specified term, typically 10, 20, or 30 years. If the insured person dies within this term, the policy pays out the agreed sum. If the insured outlives the term, the policy expires without value.

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Whole of Life Insurance
Whole of Life Insurance

As the name suggests, this type of policy provides lifelong coverage. It typically combines a death benefit with a savings component, allowing the policy to build cash value over time. While premiums are higher than term life insurance, the policy is guaranteed to pay out eventually.

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Trauma Cover
Trauma Cover

Also known as critical illness insurance, this policy pays out a lump sum if the insured is diagnosed with a specified serious illness, such as cancer, heart attack, or stroke. This can help cover medical expenses and loss of income during recovery.

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Income Protection Insurance
Income Protection Insurance

While not strictly a life insurance product, income protection is often bundled with life insurance policies. It replaces a portion of your income if you're unable to work due to illness or injury.

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Universal Life Insurance
Universal Life Insurance

A flexible policy that combines life insurance with an investment component. Policyholders can adjust premiums and death benefits over time.

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Endowment Insurance
Endowment Insurance

These policies pay out a lump sum after a specific term (the 'endowment period') or on earlier death. They combine savings and insurance.

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Funeral Insurance
Funeral Insurance

Designed to cover funeral and burial expenses. It typically offers a smaller benefit amount compared to other life insurance policies.

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Joint Life Insurance
Joint Life Insurance

Covers two lives under one policy, usually for couples. It can pay out either on the first death or on both deaths, depending on the policy structure.

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Group Life Insurance
Group Life Insurance

Offered by employers or organizations to cover a group of people under one master policy. Often comes with lower premiums due to the group discount.

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Mortgage Protection Insurance
Mortgage Protection Insurance

Designed to pay off your mortgage in the event of your death, ensuring your family can remain in the home.

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Total and Permanent Disability (TPD) Insurance
Total and Permanent Disability (TPD) Insurance

Provides a lump sum payment if you become totally and permanently disabled and are unable to work again.

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Accidental Death Insurance
Accidental Death Insurance

Pays out only if death occurs as a result of an accident. It's generally less expensive than other forms of life insurance but has limited coverage.

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Demystifying Life Insurance Premiums

What You Need to Know About Policy Payments

Life insurance premiums are the regular payments made by policyholders to maintain their coverage in New Zealand. These payments form the foundation of the insurance contract, ensuring that the promised financial protection remains in place. Understanding the intricacies of premium payments is crucial for anyone holding or considering a life insurance policy in New Zealand.

In the Kiwi context, premiums are typically calculated based on a range of factors specific to the individual and the type of policy chosen. This calculation process, known as underwriting, aims to accurately assess the risk associated with insuring an individual and price the policy accordingly.

Types of Premium Structures in New Zealand

Level premiums
Level premiums remain constant throughout the policy term, offering predictability in budgeting. While they may start higher than stepped premiums, they can provide cost savings over the long term, especially for those taking out policies at a younger age. Many New Zealand insurers offer level premiums up to a certain age, often 80 or 85.
Stepped premiums
Stepped premiums start lower but increase over time, typically with each policy anniversary. The increase is usually based on the policyholder's age and the associated increase in risk. While more affordable initially, stepped premiums can become significantly more expensive in later years, which may lead to affordability issues for some policyholders.
Hybrid premium options
Some New Zealand insurers offer hybrid options that combine elements of both level and stepped premiums. For example, a policy might have level premiums for the first 10 years, then switch to stepped premiums. This approach can provide initial certainty with the flexibility to reassess coverage later.

Factors Affecting Premium Rates

Age and health status
Age is one of the most significant factors in determining premiums. Younger individuals generally pay lower premiums due to their lower mortality risk. Health status also plays a crucial role, with pre-existing conditions potentially leading to higher premiums or exclusions.
Occupation and lifestyle
High-risk occupations (e.g., mining, aviation) or lifestyles (e.g., dangerous sports) may result in higher premiums. New Zealand insurers often have occupation categories that influence pricing.
Sum insured and policy type
The amount of cover (sum insured) directly affects the premium – higher cover amounts result in higher premiums. Different policy types (e.g., term life, whole of life, trauma cover) have varying premium structures based on the risks they cover.
Gender considerations
While gender-based pricing has become less common due to anti-discrimination laws, some policies in New Zealand may still factor this in, particularly for products like income protection where claim statistics show gender-based differences.

Payment Frequency Options

Monthly payments
Most common in New Zealand, offering easier budgeting for policyholders. However, they may result in a slightly higher overall cost due to additional administrative fees.
Quarterly payments
Less frequent than monthly, potentially offering a small discount. This option can be a good middle ground between monthly and annual payments.
Annual payments
Often come with the highest discount, sometimes up to 5% off the total premium. While requiring a larger upfront payment, this option can lead to significant savings over time.
Impact on overall cost
The frequency of payments can affect the total cost over the life of the policy. Annual payments typically offer the best value due to reduced administrative costs for the insurer.

Premium Payment Methods

Direct debit arrangements
Most New Zealand insurers prefer direct debits from a bank account. This method ensures timely payments and reduces the risk of policy lapse due to missed payments.
Credit card payments
While convenient, some insurers may charge additional fees for credit card payments. It's important to check the terms and conditions regarding payment methods.
Online payment portals
Many NZ insurers now offer secure online platforms for premium payments, allowing policyholders to manage their policies and payments digitally.
NZ-specific payment systems
Some insurers may accept payments through local systems like POLi, which is a real-time online banking payment system popular in New Zealand.

Understanding Premium Reviews and Increases

Reasons for adjustments
Insurers may adjust premiums due to changes in their costs, claims experience, or broader economic factors. For example, if an insurer experiences higher than expected claims in a particular year, they may need to increase premiums to maintain their financial stability.
Frequency of reviews
Most New Zealand insurers review premiums annually, coinciding with the policy anniversary. However, some may have more frequent reviews for certain policy types.
Policyholder rights and insurer obligations
Under New Zealand law, insurers must provide notice of premium increases and explain the reasons. The Financial Markets Authority (FMA) and the Insurance and Financial Services Ombudsman (IFSO) oversee fair practices in this area.

Managing Premium Affordability

Strategies to reduce premium costs:
Comparing quotes from multiple insurers
Choosing a higher excess (similar to a deductible) where applicable
Adjusting cover levels to match current needs
Quitting smoking or improving overall health to potentially qualify for better rates
Policy features affecting premiums
Riders or additional benefits can increase premiums
Indexation (automatic increases in cover to keep pace with inflation) will increase premiums over time
Premium freeze options allow policyholders to keep premiums constant while reducing cover
Balancing coverage and affordability
Working with a registered financial adviser can help in finding the right balance between adequate coverage and manageable premiums. They can provide insights into the New Zealand market and help tailor a solution to individual circumstances.
Non-Payment and Grace Periods
Consequences of missed payments:
Failure to pay premiums can result in policy lapse and loss of coverage. This can be particularly problematic if health conditions have developed since the policy was first taken out, making it difficult to obtain new coverage.
Grace period regulations:
New Zealand insurers typically offer a 30-day grace period for late payments. During this time, the policy remains in force, providing a buffer for policyholders to make their payment.
Policy reinstatement options:
If a policy lapses, many NZ insurers offer reinstatement options within a certain timeframe (often up to 3 months). This usually requires payment of overdue premiums and may involve a health reassessment.

Understanding life insurance premiums is essential for maintaining appropriate coverage while managing your budget effectively. Regular policy reviews and staying informed about market changes can help ensure your life insurance remains suitable and affordable.

Remember, while cost is an important consideration, the primary goal of life insurance is to secure adequate protection for your loved ones. By comprehending the various aspects of premium payments, from structure to tax implications, you can make more informed decisions about your life insurance.

In the dynamic New Zealand insurance market, it's crucial to stay informed and seek professional advice when needed. Always consult with a registered financial adviser for personalised guidance tailored to your specific circumstances and goals within the New Zealand context.

Premium Waivers and Discounts

Disability premium waiver
This feature, often available as a rider, covers premium payments if the policyholder becomes disabled and unable to work. It ensures the policy remains in force during a potentially difficult financial period.
Multi-policy discounts
Many New Zealand insurers offer discounts for holding multiple policies (e.g., life insurance, trauma cover, and income protection) with the same provider.
Loyalty rewards programmes
Some NZ insurers have introduced loyalty programmes that offer benefits for long-term customers. These might include premium discounts, higher cover limits, or additional benefits at claim time.
Future of Premium Payments in New Zealand
Emerging trends in premium structures:
The New Zealand market is seeing a trend towards more dynamic underwriting and personalised pricing. This could lead to more frequent premium adjustments based on ongoing risk assessments.
Impact of technology on payment processes:
Increasing adoption of digital platforms is making premium payments and policy management more convenient. Some insurers are exploring the use of wearable devices and health apps to offer premium discounts for healthy lifestyles.
Regulatory changes affecting premiums:
Ongoing reviews by the Reserve Bank of New Zealand (RBNZ) and the Financial Markets Authority (FMA) may influence future premium structures and pricing transparency. The industry is also adapting to the requirements of the Financial Services Legislation Amendment Act 2019.

Understanding Life
Insurance Payouts

Maximizing Your Policy's Death Benefit

Definition of death benefit in New Zealand life insurance
The death benefit is the core component of a life insurance policy in New Zealand. It represents the amount of money that the insurance company agrees to pay to the designated beneficiaries upon the death of the insured person. This payout is designed to provide financial support and security to the policyholder's loved ones, helping them maintain their standard of living, cover outstanding debts, or meet future financial obligations in the absence of the insured.
Importance of understanding your policy's payout structure
Comprehending the intricacies of your policy's death benefit is crucial for several reasons:
Ensures adequate coverage: Knowing how much your beneficiaries will receive helps in assessing whether the coverage is sufficient for their needs.
Facilitates informed decision-making: Understanding payout options allows you to tailor the policy to your family's specific financial situation.
Streamlines the claim process: Familiarity with the payout structure can help beneficiaries navigate the claim process more efficiently during an already difficult time.
Aids in financial planning: Clear knowledge of the death benefit allows for more effective integration with broader financial and estate planning strategies.
Types of Death Benefits in NZ Policies
Lump sum payments
This is the most common form of death benefit in New Zealand life insurance policies. Upon the insured's death, the entire sum assured is paid out to the beneficiaries in one single payment. This option provides maximum flexibility, allowing beneficiaries to:
Pay off large debts such as mortgages
Invest for long-term financial security
Cover immediate expenses like funeral costs
Fund major life events or expenses, such as education costs
Income stream options
Some New Zealand insurers offer policies that pay out the death benefit as a series of regular payments over time, similar to receiving a salary. This option can be beneficial for:
Replacing the deceased's income to cover ongoing living expenses
Providing a structured financial support system for beneficiaries who may not be comfortable managing a large lump sum
Ensuring long-term financial stability, especially for dependent children or spouses
Combination payouts
Increasingly, New Zealand insurers are offering policies that combine elements of both lump sum and income stream payouts. This hybrid approach allows beneficiaries to:
Receive a portion of the benefit as an immediate lump sum to cover pressing expenses
Get the remainder as regular payments for ongoing financial support
Tailor the payout to best suit their specific needs and financial management preferences
Factors Affecting Death Benefit Amount
Sum insured
This is the amount of coverage chosen when the policy is purchased. It's typically based on:
The policyholder's income: Often recommended to be 10-15 times annual income
Outstanding debts: Including mortgages, personal loans, and credit card balances
Future financial obligations: Such as children's education costs or spouse's retirement needs
Lifestyle maintenance: Ensuring beneficiaries can maintain their current standard of living
Policy type
Different types of life insurance policies in New Zealand offer varying structures for death benefits:
Term life insurance: Pays out the face value of the policy if death occurs within the specified term
Whole of life insurance: Provides coverage for the entire lifetime and may accumulate cash value
Universal life insurance: Offers flexibility in premiums and death benefits, with a savings component
Rider benefits and add-ons
Many New Zealand insurers offer additional features that can enhance or modify the death benefit:
Accidental death benefit: Provides an additional payout if death is due to an accident
Terminal illness benefit: Allows early payout of the death benefit if diagnosed with a terminal illness
Critical illness rider: Pays out a portion of the death benefit upon diagnosis of specified serious illnesses
Beneficiary Considerations
Naming beneficiaries in NZ policies
Policyholders in New Zealand have flexibility in designating beneficiaries:
Individuals: Spouse, children, other family members, or friends
Trusts: Can be useful for estate planning or managing payouts for minor children
Organisations: Charities or other non-profit entities can be named as beneficiaries It's crucial to clearly specify beneficiaries to avoid potential disputes or delays in payout.
Primary vs contingent beneficiaries
Primary beneficiaries: The first in line to receive the death benefit
Contingent beneficiaries: Receive the benefit if primary beneficiaries are deceased or unable to accept the payout Having both primary and contingent beneficiaries ensures the smooth distribution of the death benefit.
Legal implications and estate planning
Probate avoidance: Life insurance payouts typically bypass the probate process, allowing for quicker distribution to beneficiaries
Estate tax considerations: While New Zealand doesn't have inheritance tax, proper beneficiary designation can still play a role in overall estate planning
Protection from creditors: Death benefits paid directly to beneficiaries are generally protected from the deceased's creditors
Taxation of Death Benefits in New Zealand
General tax treatment
In most cases, life insurance payouts in New Zealand are not subject to income tax when paid to individual beneficiaries. This tax-free status makes life insurance an efficient way to transfer wealth to beneficiaries.
Exceptions and special cases
Business-owned policies: When a company owns a life insurance policy on an employee (e.g., key person insurance), the payout may have different tax implications
Policies held in trust: The tax treatment may vary depending on the type of trust and how it's structured
Investment-linked policies: Any investment gains within the policy may be subject to tax
Implications for estate planning
Understanding the tax treatment of death benefits is crucial for effective estate planning:
Can help in structuring policies to maximize the amount passed on to heirs
Allows for coordination with other estate planning tools to minimize overall tax burden
May influence decisions on whether to hold policies personally or within trust structures
Claiming the Death Benefit
Required documentation
To claim a death benefit in New Zealand, beneficiaries typically need to provide:
Death certificate: Official document proving the insured's death
Policy documents: Copy of the life insurance policy or policy number
Claim forms: Completed forms provided by the insurance company
Identification: Proof of identity for the beneficiaries
Medical records: May be required in some cases, especially for recent policies
Claim process in New Zealand
Notify the insurer
Contact the insurance company as soon as possible after the insured's death
Submit claim forms
Complete and return all required paperwork
Provide supporting documents
Submit death certificate and other required documentation
Claim assessment
The insurer reviews the claim and may request additional information
Payout
Once approved, the death benefit is paid out according to the policy terms
Timeframes and potential delays
Straightforward claims: Often settled within 2-4 weeks of receiving all required documentation
Complex cases: May take longer if there are policy exclusions, suspicious circumstances, or disputes
Contestability period: Claims made within the first two years of the policy (typically) may face additional scrutiny
Maximizing the Death Benefit
Policy review and adjustment strategies:
Regular reviews: Assess coverage needs every few years or after major life events (marriage, children, home purchase)
Increasing coverage: Consider boosting the sum insured as financial responsibilities grow
Consolidating policies: Might lead to cost savings while maintaining or increasing overall coverage
Inflation protection options
Indexation: Many NZ policies offer the option to increase cover annually in line with inflation
Specific inflation-adjustment riders: Can ensure the death benefit maintains its purchasing power over time
Regular sum insured increases: Some policies allow for periodic increases without new underwriting
Leveraging rider benefits
Early payout for terminal illness: Access a portion of the death benefit if diagnosed with a terminal illness
Accidental death benefit: Increases the payout if death is due to an accident
Waiver of premium: Keeps the policy in force if the insured becomes disabled and unable to pay premiums
Common Pitfalls and How to Avoid Them
Underinsurance
Regular reassessment: Review coverage as financial obligations change
Consider future needs: Factor in potential increases in expenses or obligations
Use online calculators: Many NZ insurers offer tools to help estimate appropriate coverage amounts
Beneficiary designation errors
Be specific: Clearly identify beneficiaries by full name and relation
Keep information current: Update beneficiary designations after major life events (divorce, births)
Consider contingent beneficiaries: Name backups in case primary beneficiaries predecease the insured
Policy lapse risks
Set up automatic payments: Ensure premiums are paid on time
Understand grace periods: Know how long you have to make a payment before the policy lapses
Explore reinstatement options: If a policy does lapse, act quickly to potentially reinstate it
Death Benefit Disputes and Resolution
Common reasons for claim denials
Policy exclusions: Such as death due to suicide within a specified period after policy inception
Non-disclosure: Failure to disclose relevant health information during the application process
Contestability period: Claims made within the first two years may face additional scrutiny
Dispute resolution process in NZ
Internal complaint: Start with the insurer's internal complaints process
Escalation: If unresolved, escalate to the insurer's dispute resolution team
External dispute resolution: If still unresolved, approach the Insurance and Financial Services Ombudsman (IFSO)
Role of the Insurance and Financial Services Ombudsman
Independent review: Provides impartial assessment of disputes
Binding decisions: Can make decisions binding on the insurer (up to certain financial limits)
Consumer advocacy: Helps ensure fair treatment of policyholders and beneficiaries
Future Trends in Death Benefits
Customizable payout options
Flexible structuring: Allowing beneficiaries to choose how they receive the benefit at the time of claim
Hybrid products: Combining life insurance with other financial products for more comprehensive coverage
Digital claim processes
Online claim submission: Streamlining the process for beneficiaries
AI-assisted assessment: Potential for faster claim processing and payouts
Blockchain technology: May be used to enhance security and transparency in claims handling
Integration with estate planning tools
Holistic planning platforms: Combining life insurance, will creation, and estate planning in one interface
Automated beneficiary updates: Systems that prompt regular review and easy updating of beneficiary information
Cross-product integration: Coordinating life insurance payouts with other financial products like KiwiSaver

The death benefit is the cornerstone of life insurance, providing crucial financial protection for your loved ones. By thoroughly understanding how it works within the New Zealand context, you can ensure that your policy effectively serves its intended purpose. Remember to consult with a licensed financial adviser for personalized advice tailored to your specific situation, needs, and goals. Stay informed, keep your policy up-to-date, and regularly reassess your coverage to provide the best possible financial security for your beneficiaries.

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The Life Insurance
Underwriting Process

What to Expect When Applying for Coverage

Definition of underwriting in New Zealand life insurance: Underwriting is a critical process in the New Zealand life insurance industry, serving as the foundation for risk assessment and policy issuance. It involves a comprehensive evaluation of an applicant's risk profile to determine the terms under which an insurer is willing to offer coverage. This process ensures that the premium charged is commensurate with the risk assumed by the insurer.

In the New Zealand context, underwriting is governed by principles of equity and fairness, as outlined by the Financial Markets Authority (FMA) and the Insurance Council of New Zealand (ICNZ). The process aims to strike a balance between providing accessible insurance coverage and maintaining the financial stability of insurance companies

Importance of underwriting for insurers and policyholders
For insurers, underwriting is crucial for several reasons:
Risk management: It allows insurers to accurately assess and price risks, ensuring long-term financial stability.
Portfolio balance: By carefully selecting risks, insurers can maintain a balanced and diverse portfolio.
Regulatory compliance: Proper underwriting helps insurers meet solvency requirements set by the Reserve Bank of New Zealand (RBNZ).
For policyholders, underwriting serves important functions:
Fair pricing: It ensures that premiums are based on individual risk profiles, preventing low-risk individuals from subsidizing high-risk ones.
Appropriate coverage: The process helps in tailoring policies to individual needs and circumstances.
Market stability: By maintaining insurer solvency, underwriting helps ensure that valid claims can be paid when needed.
Steps in the Underwriting Process
Initial application submission
The process begins when an applicant submits a life insurance application form. In New Zealand, these forms typically include:
Personal details: Name, age, gender, occupation, and contact information.
Health information: Current health status, medical history, and family medical history.
Lifestyle factors: Smoking status, alcohol consumption, exercise habits, and risky activities.
Financial information: Income, assets, and existing insurance coverage.

Many New Zealand insurers now offer online application options, streamlining the initial submission process.

Information gathering
Once the application is received, the underwriter begins collecting additional information:
Medical records: With the applicant's consent, insurers may request records from GPs or specialists.
MIB check: A check with the Medical Information Bureau (MIB) for any previous insurance applications or claims.
Additional questionnaires: For specific health conditions or high-risk occupations/hobbies.
Financial checks: For larger policies, insurers may verify income and assets.
Risk assessment
The underwriter analyses all gathered information to evaluate the applicant's risk level:
Medical risk: Assessing current health, medical history, and potential future health risks.
Occupational risk: Evaluating hazards associated with the applicant's job.
Lifestyle risk: Considering factors like dangerous hobbies or travel to high-risk areas.
Financial risk: Ensuring the requested coverage amount is justified by the applicant's financial situation.

Underwriters in New Zealand use a combination of actuarial tables, company guidelines, and professional judgment to assess these risks.

Decision making and policy offer
Based on the risk assessment, the underwriter decides on the terms of coverage:
Standard rates: For average risks.
Preferred rates: For better-than-average risks.
Rated policy: Higher premiums for increased risks.
Modified coverage: Exclusions or limitations for specific conditions.
Postponement: Delaying a decision pending health improvements or additional information.
Decline: If the risk is deemed too high to insure.

The applicant is then presented with the policy offer, including premium rates and any special terms or conditions.

Types of Underwriting in New Zealand
Full underwriting
This is the most comprehensive form of underwriting, typically used for larger policies or when initial information suggests potential health issues:
Detailed health questionnaire
Review of medical records
Often includes a medical examination and laboratory tests
Provides the most accurate risk assessment and potentially the best rates for healthy applicants
Simplified issue
A streamlined process often used for lower coverage amounts or specific policy types:
Fewer health questions
Usually no medical exam required
Faster approval process
May have lower coverage limits and slightly higher premiums due to less detailed risk assessment
Guaranteed issue
Offers coverage without health questions or medical exams:
Typically used for small policies, often for funeral expenses
Higher premiums due to unknown health risks
Often has a waiting period before full benefits are payable
Useful for those who might not qualify for standard coverage due to health issues
Factors Considered in Underwriting
Health and medical history
Current health status: Any existing medical conditions or recent health changes.
Medical history: Past illnesses, surgeries, or treatments.
Family medical history: Hereditary conditions that might increase risk.
Medications: Current and past prescription drug use.
Lifestyle factors
Smoking: Current use of tobacco or nicotine products, including e-cigarettes.
Alcohol consumption: Frequency and amount of alcohol intake.
Exercise habits: Regular physical activity can positively impact risk assessment.
Diet: Some insurers may consider dietary habits in their assessment.
Occupation and hobbies
Job hazards: High-risk occupations like mining, aviation, or offshore oil work.
Workplace environment: Exposure to harmful substances or dangerous conditions.
Dangerous hobbies: Activities like skydiving, mountain climbing, or motor racing.
Sports participation: Some contact sports may be considered higher risk.
Financial situation
Income: To justify the amount of coverage and ensure premiums are affordable.
Assets: Total financial picture to determine appropriate coverage levels.
Existing insurance: To prevent over-insurance and ensure financial justification for additional coverage.
Medical Examinations and Tests
When they're required
For policies above certain coverage amounts (often NZD 500,000 or more).
When initial health information indicates potential issues.
For applicants above a certain age (often 50 or 60).
Some insurers require them for all fully underwritten policies.
Common tests for New Zealand applicants
Blood tests: Checking for conditions like diabetes, cholesterol levels, and HIV.
Urinalysis: Screening for kidney issues, diabetes, and drug use.
Blood pressure check: Assessing cardiovascular health.
Height and weight measurements: Calculating BMI for obesity-related risks.
ECG (for higher coverage amounts or older applicants): Evaluating heart health.
How results affect the underwriting decision
Normal results: May qualify the applicant for standard or preferred rates.
Minor abnormalities: Might lead to slightly higher premiums or further investigation.
Significant findings: Could result in higher premiums, exclusions, or in some cases, denial of coverage.
Unexpected discoveries: The insurer is obligated to inform the applicant of any serious health issues uncovered.
Non-Medical Underwriting Factors
Credit history in NZ context
While less emphasised than in some countries, severe financial issues may be considered:
Bankruptcy: Recent bankruptcies might affect insurability or premium rates.
Debt levels: High debt might influence the financial underwriting process.
Driving record
Traffic violations: Multiple infractions might indicate a higher-risk lifestyle.
DUI convictions: Can significantly impact risk assessment and insurability.
Accidents: A history of accidents might suggest increased risk-taking behaviour.
Travel plans
Frequent travel to high-risk countries: May lead to travel exclusions or premium loading.
Extended stays abroad: Could affect policy terms or require special provisions.
Adventure travel: Participation in high-risk activities while traveling may be considered.
Underwriting Decisions and Outcomes
Standard rates
Based on average mortality or morbidity risk for the applicant's age and gender.
Typically offered to individuals with no significant health issues or risk factors.
Preferred rates
Offered to applicants with better-than-average health profiles.
May require excellent health, no tobacco use, and a clean family medical history.
Some insurers offer multiple preferred classes (e.g., Preferred Plus, Preferred).
Substandard rates or exclusions
Higher premiums (also called "rating" or "loading") for increased health risks.
Exclusions for specific conditions or activities.
May be temporary (e.g., until a condition improves) or permanent.
Decline
Used when the risk is deemed too high to insure.
Reasons might include severe health conditions, extremely hazardous occupations, or a combination of multiple risk factors.
Some insurers may offer alternative products (e.g., accident-only cover) in these cases.
Technology in New Zealand Underwriting
Automated underwriting systems
Rules-based engines that can make instant decisions for straightforward cases.
Often used for simplified issue policies or as a first step in full underwriting.
Can significantly reduce processing times for many applications.
Data analytics and predictive modelling
Use of big data to identify risk factors and trends.
Machine learning algorithms to predict mortality and morbidity risks.
Helps in more accurate pricing and risk assessment.
Impact on application processing times
Many simple cases can now be approved in minutes or hours rather than days or weeks.
Complex cases still require human underwriter review but benefit from faster information gathering and analysis.
Challenging Underwriting Decisions
Appeal process in New Zealand
Applicants have the right to appeal unfavorable decisions.
The process typically involves submitting a formal request for reconsideration to the insurer.
If unresolved, complaints can be escalated to the Insurance and Financial Services Ombudsman (IFSO).
Providing additional information
New medical reports or test results that show improved health.
Clarification of misunderstood information in the original application.
Evidence of lifestyle changes (e.g., smoking cessation, weight loss).
Seeking alternative coverage options
Different insurers may have varying underwriting criteria.
Working with a financial adviser can help identify insurers more likely to offer favorable terms.
Consider alternative policy types or structures that might be more suitable.
Tips for a Smooth Underwriting Process
Preparing for your application
Gather all relevant medical records and information before applying.
Know your family medical history.
Be prepared to provide detailed information about your occupation and hobbies.
Being honest and thorough
Disclose all relevant information, even if not specifically asked.
Understand that non-disclosure can lead to claim denials or policy cancellations.
If unsure about any information, ask your GP or the insurer for clarification.
Working with a financial adviser
Advisers can help match you with insurers likely to offer the best terms.
They can explain complex underwriting decisions and help with appeals if necessary.
Advisers often have insights into each insurer's underwriting philosophy and preferences.
Future Trends in NZ Life Insurance Underwriting
Continuous underwriting
Ongoing risk assessment throughout the policy term.
Potential for premium reductions if health or lifestyle improves.
May involve regular health check-ins or data from wearable devices.
Use of wearable devices and health apps
Some NZ insurers are piloting programs using data from fitness trackers.
Could lead to more personalized pricing and incentives for healthy behaviours.
Raises privacy concerns that will need to be addressed.
Personalized pricing models
Moving beyond broad risk categories to highly individualized premiums.
Incorporation of more lifestyle and behavioral data in risk assessment.
Potential for 'pay-as-you-live' insurance models.

Remember that underwriting practices can vary between insurers and may evolve over time. Always consult with a licensed financial adviser for the most current and personalized advice regarding life insurance in New Zealand. Stay informed about your rights as a consumer and don't hesitate to ask questions or seek clarification throughout the application process.

Designating Life Insurance Beneficiaries

Ensuring Your Loved Ones Are Protected

Life insurance beneficiaries are individuals or entities designated to receive the policy's death benefit when the insured person passes away. In New Zealand, proper beneficiary designation is a crucial aspect of estate planning, ensuring that your life insurance proceeds are distributed according to your wishes.

Types of Beneficiaries in New Zealand
Primary beneficiaries
The first in line to receive the death benefit.
Contingent beneficiaries
Those who receive the benefit if primary beneficiaries are deceased or unable to claim.
Estate as beneficiary
When the policyholder's estate is named, allowing for distribution through a will.
Choosing Beneficiaries
Common choices for beneficiaries in New Zealand include:
Family members: Spouse, children, or parents
Trusts: Useful for managing distributions to minors or for tax planning
Charities or organisations: For those wishing to leave a legacy
Considerations for blended families: Stepchildren and ex-spouses may require special attention
Legal Aspects of Beneficiary Designation
New Zealand inheritance laws: Understanding how these interact with beneficiary designations
Relationship Property Act implications: How shared assets may affect beneficiary choices
Age restrictions: Considerations when naming minors as beneficiaries
Updating Beneficiary Information
Life events prompting changes: Marriage, divorce, birth of children
Process for updating: How to inform your New Zealand insurer of beneficiary changes
Tax Implications for Beneficiaries
Income tax treatment: Life insurance payouts are generally not taxable in New Zealand
Estate duty considerations: While estate duty was abolished in 1992, other tax implications may apply
Common Mistakes to Avoid
Neglecting to name a beneficiary: This can lead to delays and complications
Failing to keep designations current: Outdated information may result in unintended recipients
Naming your estate instead of individuals: This may expose the benefit to creditors
Special Considerations
Māori land and cultural considerations: How traditional land ownership may affect beneficiary choices
Overseas beneficiaries: Implications for international estate planning
Business-related policies: Considerations for key person or business continuation insurance
Alternative Options
Life insurance trusts: How these can be used in New Zealand for estate planning
Using a 'life interest': For complex family situations where ongoing support is needed

Regular reviews of your beneficiary designations are essential to ensure they reflect your current wishes. For complex situations, seeking advice from a lawyer or financial adviser specialising in New Zealand estate law is recommended.

Unlocking the Power of Cash Value

The Hidden Savings Potential in Permanent Life Insurance

Life insurance beneficiaries are individuals or entities designated to receive the policy's death benefit when the insured person passes away. In New Zealand, proper beneficiary designation is a crucial aspect of estate planning, ensuring that your life insurance proceeds are distributed according to your wishes.

Types of Beneficiaries in New Zealand
Primary beneficiaries
The first in line to receive the death benefit.
Contingent beneficiaries
Those who receive the benefit if primary beneficiaries are deceased or unable to claim.
Estate as beneficiary
When the policyholder's estate is named, allowing for distribution through a will.
Choosing Beneficiaries
Common choices for beneficiaries in New Zealand include:
Family members: Spouse, children, or parents
Trusts: Useful for managing distributions to minors or for tax planning
Charities or organisations: For those wishing to leave a legacy
Considerations for blended families: Stepchildren and ex-spouses may require special attention
Legal Aspects of Beneficiary Designation
New Zealand inheritance laws: Understanding how these interact with beneficiary designations
Relationship Property Act implications: How shared assets may affect beneficiary choices
Age restrictions: Considerations when naming minors as beneficiaries
Updating Beneficiary Information
Life events prompting changes: Marriage, divorce, birth of children
Process for updating: How to inform your New Zealand insurer of beneficiary changes
Tax Implications for Beneficiaries
Income tax treatment: Life insurance payouts are generally not taxable in New Zealand
Estate duty considerations: While estate duty was abolished in 1992, other tax implications may apply
Common Mistakes to Avoid
Neglecting to name a beneficiary: This can lead to delays and complications
Failing to keep designations current: Outdated information may result in unintended recipients
Naming your estate instead of individuals: This may expose the benefit to creditors
Special Considerations
Māori land and cultural considerations: How traditional land ownership may affect beneficiary choices
Overseas beneficiaries: Implications for international estate planning
Business-related policies: Considerations for key person or business continuation insurance
Alternative Options
Life insurance trusts: How these can be used in New Zealand for estate planning
Using a 'life interest': For complex family situations where ongoing support is needed

Regular reviews of your beneficiary designations are essential to ensure they reflect your current wishes. For complex situations, seeking advice from a lawyer or financial adviser specialising in New Zealand estate law is recommended.

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Where to
Buy Car Insurance

Companies & Brokers Compared

AMI
AA
ANZ
ASB
BNZ
COVE
CROMBIE
INITIO
KIWI
LANTERN
MAS
NZI
OMF
PROTECTA
QBE
STATE
TOWER
TRADE ME
AMI Insurance
AMI Insurance

AMI is one of New Zealand's largest insurance providers, offering a range of car insurance options from third-party to comprehensive cover.

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AA Insurance
AA Insurance

The automobile association sells policies underwritten by Vero, with options like agreed value and roadside assistance packages.

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ANZ
ANZ

One of the big four banks that also sells car insurance policies through its branches and advisers.

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ASB
ASB

Another major bank, ASB sells vehicle insurance covering accidental damage, fire, theft, and liability.

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BNZ
BNZ

BNZ offers car insurance with optional extras like excess-free glass cover and new vehicle replacement in the first year.

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Cove
Cove

Cove is an online insurer providing comprehensive, third-party fire & theft, and Third-party only car policies.

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Crombie Lockwood
Crombie Lockwood

Large insurance brokerage offering car insurance solutions from various underwriters for businesses and individuals.

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Initio
Initio

Start-up digital insurer selling car and other insurance products directly to customers online.

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Kiwi Bank
Kiwi Bank

The popular Kiwi-owned bank also sells car insurance policies through its insurance division.

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Lantern Insurance
Lantern Insurance

Fast-growing insurance brokerage helping clients find suitable car insurance policies from different insurers.

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MAS
MAS

Mutual insurance society providing car insurance cover and other products to members and the public.

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NZI
NZI

General insurer with offerings including comprehensive car insurance sold through an adviser network.

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OMF Insurance
OMF Insurance

The online marketplace and classified site with a platform for users to purchase car insurance policies.

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Protecta Insurance
Protecta Insurance

Protecta is a specialist provider of niche insurance products including car insurance policies.

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QBE
QBE

The global insurer QBE has a presence in New Zealand offering car insurance among its personal insurance products.

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State Insurance
State Insurance

State has been protecting New Zealanders for over 100 years and sells competitively priced vehicle cover.

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Tower Insurance
Tower Insurance

Tower is a well-known insurance brand in New Zealand selling car insurance alongside its other personal lines.

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Trademe Insurance
Trademe Insurance

Cove is an online insurer providing comprehensive, third-party fire & theft, and Third-party only car policies.

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How much will
car insurance cost?

Key Factors Explained

Driver's Age and Experience

Age and driving experience play a significant role in determining car insurance premiums. Younger and inexperienced drivers are statistically more likely to be involved in accidents, resulting in higher insurance costs compared to older, more experienced drivers.

Driving Record and Claims History

An individual's driving record, including any traffic violations, at-fault accidents, or previous insurance claims, can significantly impact the cost of car insurance. A clean driving record with no claims typically attracts lower premiums.

Vehicle Type and Value

The make, model, age, and value of the insured vehicle influence insurance costs. Newer, more expensive vehicles with higher repair costs generally have higher premiums compared to older, less valuable models.

Location and Garaging Address

The geographic location and the area where the vehicle is primarily parked or garaged can affect insurance rates. Urban areas with higher traffic density and crime rates tend to have higher premiums than rural areas.

Level of Coverage and Deductibles

The type of coverage selected, such as comprehensive, third-party fire and theft, or third-party liability, impacts the cost of car insurance. Additionally, higher deductibles often result in lower premiums, while lower deductibles increase the overall cost.

Annual Mileage and Usage

Vehicles driven more frequently and over longer distances are at a higher risk of accidents, leading to higher insurance costs. Insurers consider the annual mileage and intended usage of the vehicle when calculating premiums.

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Car Insurance Options

Comparing Coverage & Cost (Liability, Comprehensive, More)

Major Insurance Companies

Comprehensive and liability car insurance coverage options are widely available from major insurance companies operating in New Zealand, such as AA Insurance, AMI, State Insurance, Tower Insurance, and Vero. These providers offer various policy types and coverage levels to cater to different needs and budgets.

Banks and Financial Institutions

Many banks and financial institutions in New Zealand, including ANZ, ASB, BNZ, Kiwibank, and Westpac, offer car insurance products alongside their banking services. These providers may offer bundle discounts or package deals for existing customers.

Online Insurance Platforms

Several online insurance platforms, such as Insurance.co.nz, Insure Direct, and Trade Me Insurance, provide convenient digital channels for comparing and purchasing car insurance policies from multiple insurers, allowing customers to easily evaluate different coverage options and costs.

Specialist Insurers

Specialized insurers like Cove Insurance, Lantern Insurance, and Youi focus exclusively on vehicle insurance products, often offering tailored coverage and competitive pricing for specific customer segments or vehicle types.

Broker Services

Insurance brokers, such as Crombie Lockwood and Leading Insurance Services, can assist in comparing and securing car insurance coverage from various providers, acting as intermediaries to help customers find the most suitable policy based on their unique requirements and circumstances.

Peer-to-Peer Insurance Models

Emerging peer-to-peer insurance models, like those offered by Initio and OMF Insurance, provide an alternative approach to traditional car insurance by allowing policyholders to pool their premiums and share the risk within a community-based framework.

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transfer the materials to another person or materials;
attempt to decompile or reverse engineer any software;

Car Insurance Laws

Understanding Minimum Coverage & Legal Needs

Third-Party Liability Insurance

In New Zealand, all motor vehicles operated on public roads must have at least third-party liability insurance coverage. This mandatory minimum protects against legal liability for injury or property damage caused to others in the event of an accident.

Land Transport Act 1998

The Land Transport Act 1998 is the primary legislation that governs the compulsory insurance requirements for motor vehicles in New Zealand. It outlines the legal obligations for vehicle owners and drivers, including the minimum level of insurance coverage required.

Vehicle Registration and Licensing

When registering a vehicle or renewing its license with the New Zealand Transport Agency (NZTA), vehicle owners must provide proof of valid third-party liability insurance coverage. Failure to maintain the required insurance can result in fines, license suspension, or other penalties.

Penalties for Non-Compliance

Driving without the legally required insurance coverage is a serious offense in New Zealand. Penalties may include fines, demerit points on the driver's license, vehicle impoundment, or even prosecution in severe cases of repeated non-compliance.

Additional Insurance Coverage Options

While third-party liability insurance is the legal minimum, drivers in New Zealand have the option to purchase additional coverage, such as comprehensive or third-party fire and theft insurance, to protect their own vehicle and assets in the event of an accident or other insured incidents.

Commercial Vehicle Requirements

For commercial vehicles, such as trucks, buses, and other heavy vehicles, additional insurance requirements may apply to ensure adequate coverage for potential damages, liabilities, and risks associated with the operation of these vehicles.

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Life insurance quote

Requesting quotes allows you to easily compare pricing, coverages, benefits and policy features across different insurance companies. This way, you can find the policy that best suits your budget and requirements.
Compare rates from top insurers
Get accurate pricing for your situation
View coverage options side-by-side
Quotes are obligation-free
Save time and money
Protect your vehicle properly
Get a quote

How to save on car insurance

Discounts you can qualify for

Safe Driver Discount

Many insurers in New Zealand offer discounts to policyholders with a clean driving record and no at-fault accidents or traffic violations for a specified period, often ranging from three to five years.

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Multi-Vehicle Discount

If you insure more than one vehicle with the same insurance provider, you may be eligible for a multi-vehicle discount, which can reduce the overall cost of your car insurance premiums.

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Bundle Discount

Bundling your car insurance with other insurance products, such as home or contents insurance, from the same provider can often result in a discount on your car insurance premium.

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Security Device Discount

Installing approved security devices, such as immobilizers, alarms, or tracking systems, in your vehicle can help you qualify for a discount on your car insurance premiums, as these features reduce the risk of theft.

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Low Mileage Discount

If you drive fewer kilometers annually, you may be eligible for a low-mileage discount, as insurers consider low-mileage drivers to have a lower risk of accidents.

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Loyalty Discount

Many insurers in New Zealand offer loyalty discounts to customers who have been with the company for a certain number of years, rewarding their long-term commitment and customer retention.

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Car insurance

A type of insurance protecting your vehicle

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Property and Casualty Insurance
Vehicle Insurance
Personal Lines Insurance
First-Party Insurance
Third-Party Liability Insurance
Compulsory Insurance
Property and Casualty Insurance

Car insurance is a type of property and casualty insurance, which covers the risks associated with physical assets, such as vehicles, and liabilities arising from accidents or incidents involving those assets.

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