How much does life insurance cost in New Zealand?

Factors that contribute to the cost of life insurance

Your policy and level of cover

As you’d expect, a higher cover amount means you’ll pay higher premiums. Even though you can lower your benefit amount to save on the price of life insurance, it’s important to make sure you don’t leave your family with insufficient cover. 

Underinsurance is a growing problem in New Zealand as a lot of people underestimate how much their lives are really worth or how their death could financially affect loved ones.¹ The best way to avoid this is to talk to your family about their plans for the future and what their living situation would be like if you weren’t around. This will help you figure out the costs that your family will face if you’re no longer around, and how long you want them to be able to cover these for. 

It’s also a good idea to factor in the financial resources you have available such as any savings or long-term investments that will be payable to your family if you were to pass away. These could potentially reduce the amount of money your loved ones will need from your life insurance payout, helping you set a more suitable cover amount on your policy.

Also keep in mind that your family’s financial position could improve as time goes on due to years of working, saving, and just getting a little smarter with your money. This means your ideal cover amount could reduce over the years since your family may be in a better financial position by the time you pass away. So, life insurance should be seen as a risk management tool in case you were ever in a position where your financial needs outweighed your ability to meet them. That’s why it’s worth revisiting your policy and cover amount as your needs change over time.

Life insurance premiums can also be influenced by any optional extras added to your policy. Here’s what some providers will offer you when signing up:

Total & Permanent Disability Insurance (TPD)

As tough as Kiwis can be, sometimes life can knock you down to the point that you can’t work or live independently anymore. Even though you’re still around, your family could feel the financial hit if your regular income was no longer available. Total & Permanent Disability Insurance gives you and your family a lump-sum payout if you become permanently disabled and have been assessed as unable to ever work in any occupation again.

While TPD cover will increase the cost of your premiums, if you were no longer capable of working it could have a serious impact on the long-term financial goals of your family.

Serious Illness Insurance

Think of the hassle of getting the occasional flu or bug. On top of taking time off work, you’re often left tired and unable to enjoy life with the people you love. But imagine how much worse it would be if you ever suffered a serious life-changing illness. On top of not being able to work for some time, you and your family could face years of expensive medical bills to improve your quality of life. That’s why it might be worth looking into Serious Illness Insurance. This can help with the financial challenges associated with your condition or just make life a little easier for you and your family to adjust.

Keep in mind that Serious Illness Insurance won’t cover you for every and any medical condition. You’ll need to check the relevant Policy Document for specific terms, conditions, and criteria that could apply as only certain conditions (like heart attack, stroke, cancer and coronary artery bypass surgery) are covered and in order to claim your condition needs to meet the definitions set out in the policy.

Your lifestyle and personal factors