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.

It’s probably no surprise then, that a popular online retailer recently did a survey on life insurance and found that nearly half of New Zealanders don’t have any life insurance at all. And, according to the Financial Services Council, only 20% of us have thought about life insurance in the past few years.

“Although most Kiwis are aware of their financial risks, they aren’t doing much about it”, says Richard Klipin, CEO. Further he states, “It is worrying that many of us spend more time worrying about protecting our car than our life, family or source of income.”

It’s true that life insurance is a bit different to insuring your car in case of a prang, so at OneChoice, we’ve answered a few basic questions you probably have, to help make things clearer. 

So – what is life insurance, and why would someone need it? Life insurance is basically a payout that your beneficiaries (that is, people you nominate) can get if you were to pass away.

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 funeral costs and everyday bills. They also won’t have to worry as much about how to cover the loss of your income if they were to receive a life insurance payout. Having life insurance can give your family the space to grieve and cope emotionally, and that’s why lots of New Zealanders opt to get it once they start a family or get married.

I’m young, healthy and don’t have kids – do I really need life insurance?

When you’re single or living alone, life insurance can be important for peace of mind, since just about everyone has 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 or single-parents are raising kids on their own. 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. Life insurance and the optional extra covers you can add to some life policies, such as for serious illness and permanent disablement, could help you maintain your own financial independence and could assist your parents’ and family’s financial future too.

What if I do have kids?

Things will likely look a little different if you do have kids. You may have a mortgage, a possible sleep deficiency, a home overrun by toys and a massive weekly Countdown bill.

At this stage of your life, you may want to make sure that your family is protected financially if you or your partner were to suddenly pass away. Life insurance can help make sure there’s money coming in to keep up with the mortgage repayments (and other essentials) during this time.

We all have different lives and lead unique lifestyles, and we all have bills and expenses that need to be paid. Thinking about your financial plan now, while you’re healthy, can help to give you peace of mind that these expenses would be covered if life was to give you lemons.

Kiwi family outdoors

So, what do my beneficiaries get if I die?

When someone dies, it’s an emotionally turbulent experience, but it can also be financially overwhelming (especially if they were the main income earner).

As with most things in life, it pays to be prepared. Ask yourself: if you were no longer here, consider how your family (or your beneficiaries) would cope with bills, mortgage payments, funeral costs, and other expenses.

“We need to drive an honest conversation about improving the way we think about and manage these risks,” says Klipin.

Use this information to open up that conversation. Discuss how much money your partner or family would need to make sure these expenses would be taken care of and discuss whether life insurance could be an option for you.

The cost of life insurance

It’s only natural to want to know exactly how much this peace-of-mind might cost you. But unfortunately, there’s not a simple answer.

The cost of your premiums will depend on a range of factors, such as your age, the amount of cover you need, your hobbies, your health status (for example, whether you’re a smoker), and much more.

But even if you’re seeing more than a few grey hairs and can’t remember the last time you were at a gym, remember that you can plan for your family’s financial future.

If you want to learn more about how life insurance could protect your family, why not request a quote  - it only takes a minute!