Life Insurance

With Life Insurance the policy owner(s) (usually your loved ones) receive a lump sum. The money might be used to repay debts or to meet any outstanding obligations. Most life insurance policies have a built-in Terminal Illness benefit. This means that if you have a terminal illness with less than 12 months to live, your life insurance can be paid out early. It is very important to get the ownership of your life insurance right (to ensure the funds go where they are intended to go).

Stroke is NZs second largest single cause of death. Every year 8,000 people in NZ have strokes – that’s 22 people a day. (Stroke foundation of NZ 2010).

One in six males over the age of 30 will die before he reaches 65 (NZ Life Tables, 2000-2002)

One in nine females over the age of 30 will die before she reaches 65 (NZ Life Tables, 2000-2002)

Life insurance can be set up in different ways; the most common form of life insurance is known as ‘lump sum’ life insurance and calculations are usually made to cover (for example) debt, the cost of a funeral, and any other requirements discussed with your adviser.

Monthly Life insurance can be used in conjunction with lump sum life insurance and this pays the owner of the policy a monthly income for a pre-determined number of years (ideal where there are dependent children).
It is very important to get the structure right for your life insurance - there are different premium structures. If you want your life insurance long-term, it is much more cost-effective to ‘fix’ all or part of your cover on a ‘level’ premium structure.
“Fixing" your premiums is similar to having a fixed rate home loan, in the sense that you are protected against significant age-related premium increases in the future.

The most common premium structure for life insurance is called ‘stepped’ or ‘rate for age’. (It is the structure that most Life insurance policies are automatically sold under). This means that you pay a rate, depending on your age, and the older you get with this type of structure, the greater the annual premium-increases are. With a ‘level’ structure, the premium and level of life insurance is set now and remains the same for the chosen ‘fixed’ term.