By Graham Hill
Executive Manager, Life Distribution
Life insurance is one of those topics which can seem so complex that you just put it into the too-hard-basket.
Things in your life change, and your insurance needs might change too. Milestones like buying a house or having a baby are an exciting time for anyone, but it’s also a good reason to revisit your policy and make sure you have a plan for that debt or for your family if something should happen to you.
As with any insurance, when you review your cover you might decide that another insurer could offer you a better deal. But before you cancel your policies and make the switch, it’s important to seek advice.
Everyone’s circumstances are different, which means everyone needs something different from their insurance policy. That’s why when you look at getting life insurance, you won’t have to choose just one type of cover.
A lot of us prefer to shop online for just about everything these days, but it’s important to know that when you’re looking at life insurance, policies you can buy online compared to those you buy through an adviser are not always apples with apples.
Quite often advisers will be able to offer you a greater range of policies, more comprehensive cover or a more cost effective structure of covers.
If you’re worried about the cost going up as you get older, there are different ways you can structure your premiums. You can choose from stepped premiums, which start out a lower price and increase each year based on your age, or level premiums, which begin higher but stay locked at that price each year without increasing.
Many life insurance policies offer an optional extra which allows you to insure your children or grandchildren, as well as yourself, under your policy. It means that if your child is diagnosed with one of the listed conditions, you’ll get a payout that you can use to look after them – whether it be for medical bills or to help you to take time off work.
If you or your family are making a claim on your life insurance policy, you’ve probably had some bad news.
But the silver lining is that in New Zealand you don’t pay tax on most life insurance payments you or your estate receive which relate to illness or loss of life – so you can calculate how much cover you need knowing you’ll receive the full amount. One exception is any payments you receive under an income protection policy, as income is tax deductible.