Do I need life insurance? Your questions answered
We’re all guilty of putting ‘life admin’ in the too hard basket. From that weird noise coming from the car to sorting out our taxes, there are plenty of things that get pushed aside in the hustle and bustle of life. Life insurance can be a classic example.
For example, 98% of us ensure our homes, and 95% insure our cars. But just 29% have life insurance.
It’s true that life insurance is a bit different to insuring your car in case of a prang, so we’ve answered a few basic questions you probably have, to help make things clearer.
What is life insurance or life cover, and why would someone need it?
What is life insurance and how does it work?
Life insurance, also known as life cover, is basically a payout that your beneficiaries (that is, people you nominate) can get if you were to pass away.
To set up a policy, you’ll first need to make a few key decisions, including how much of a payout you want your beneficiary to receive. Usually, you will determine this amount by looking at how much they would need to pay off any debts, cover bills for a certain time, and set them up with a fund to see them through.
The cost of your life insurance premiums will be determined by how much cover you want, as well as other factors including your age, health history and lifestyle choices such as your smoking status. You’ll then pay regular premiums, knowing that if the worst were to happen, your loved ones will be taken care of.
Why life insurance could matter more than you think
While it’s not a fun thought, having life insurance means that your loved ones won’t have to worry about finding money in a rush for things like mortgage repayments, everyday bills and funeral costs. They also won’t have to worry as much about how to cover the loss of your income.
Because when you’re no longer here, the last thing you’d want is for your loved ones to be worrying about bills or debts on top of their grief. Life insurance is a tool that can help take that weight off their shoulders so they can focus on healing, not hustling to make ends meet.
Key life stages where insurance could become important
Having life insurance can give your family the space to grieve and cope emotionally, and that’s why New Zealanders may opt to get it once they start a family or get married.
That said, when you’re single or living alone, life insurance can also be important for peace of mind, since most people may have financial pressures once they hit their twenties and beyond.
We know that family structures in New Zealand are changing, so there may be cases where some younger people are financially assisting their families. In cases like these, an unexpected serious illness or becoming permanently disabled as a result of an accident could have a big financial impact on your wider family.
Therefore, these are some of the key life stages to consider for getting life insurance:
- Getting married or into a serious relationship
- Having kids
- Taking on the care of elderly parents
- Taking on a large debt such as a mortgage
- Any other major life changes
Common misconceptions about life insurance in New Zealand
One misconception about life insurance in New Zealand is the cost – specifically that it is too high. The fastest way to dispel this myth is by requesting a life insurance quote. While cost may vary from person to person, keep in mind that it can be affordable, especially if you start at a younger age and don’t smoke.
Another common life insurance myth is that you can’t get insurance if you have pre-existing conditions. While it may cost a little more, or your provider might exclude that particular condition, you may still be able to get cover.
Finally, one of the biggest untruths about life insurance is that young, healthy, single people don’t need it. This does mean that your premiums will likely be lower, but it can still be a good idea to start getting cover early so you can set yourself up before you encounter any serious health problems.
Life insurance trends: where do Kiwis stand?
According to a Reserve Bank of New Zealand report, life insurance premiums take up just 24% of insurance premiums in the country. That’s one of the lowest rates in the world, placing us between Latvia and Estonia.
“Although most Kiwis are aware of their financial risks, they aren’t doing much about it”, says Richard Klipin, CEO of the Financial Services Council. He continued, “It is worrying that many of us spend more time worrying about protecting our car than our life, family or source of income.”
You can take a step forward by learning more about OneChoice Life Insurance or request a quote to get started. It’s a simple way to start protecting what matters most.
20 Aug 2025