Do I need life insurance in New Zealand?
Life insurance has become much more common in New Zealand1, so it could be worth looking into according to a lot of fellow Kiwis (that’s us – not the birds). Having cover in place can make sure your family’s financial future is sorted out in case of a tragedy. But even if you don’t have kids or other dependants, there’s nothing wrong with thinking about yourself once in a while!
If you’re thinking about whether or not you need life insurance, consider if there are any people who rely on you financially. If you have a family to support, could they afford to live without you? You can answer that by adding up the expenses they would face if you weren’t around. Start with the common things like:
- a funeral or tangi
- school fees
- the mortgage
- miscellaneous debts.
While you’re at it, you might want to consider their general lifestyle by factoring in enough money for:
- home renovations
- a new car
- a holiday, or
- the occasional fish and chips dinner.
These expenses can add up to a lot of money over a lifetime which is why life insurance might be a good call. It can make sure your family isn’t left hanging with the financial impact if you passed away.
If you live on your own or don’t have a family to provide for, you could still find life insurance useful for yourself. This can cover you for and help you cope with unplanned curveballs like a serious illness or permanent disability that stops you from living independently. But keep in mind that not all policies will cover these events so you’ll need to shop around for cover that suits you.
Here’s a quick rundown of how life insurance works in New Zealand and any local factors you might want to consider before signing up.
Life insurance that loves Kiwis – you and the fruit.
How is life insurance offered in New Zealand?
Let’s be honest; Kiwis aren’t average. The way we speak, live our lives, and prepare for a rugby match is one-of-a-kind. We’re different to the rest of the world, so our life insurance should be too.
Thankfully, life insurance has come a long way here in New Zealand. Some providers are now offering policies designed just for our way of life, which can make a big difference when you’re looking for the right option.
Here’s how local life insurance providers can offer great value:
- Lower premiums for non-smokers: only 13% of New Zealanders smoke regularly and that number is dropping every year2 (no wonder our land is so clean). On top of their clothes smelling better, this means a lot of Kiwis could be eligible for lower premiums if they’re non-smokers. Double-win!
- Advanced payout for a funeral or tangi: funerals can be expensive in New Zealand so paying for one on short notice can add a lot of additional stress on loved ones at a time when they really don’t need it. For those following Maori customs, there’s the added cost of a tangi which involves up to three days of gathering. This is why some insurers offer a partial payment in advance to help your family cover these immediate costs, subject to submitting all the requested documents, even if their claim is still being assessed.
- Backed by local underwriters: it’s good to know the people who have your back are home-grown. Having your life insurance policy backed by a trusted, local underwriter means you can be sure your family’s future is in safe hands.
Should I consider how long I might live when getting life insurance?
There’s no sure way to know how long you’ll live but it’s still worth crunching some numbers when looking into life insurance. This can give you a rough idea of how to set up your policy to give you the best possible value.
Like most great countries, life expectancy has grown in New Zealand since the 1980s. This means Kiwis are living longer than ever before (you’re welcome, rest of the world). Recent data suggests that men in New Zealand live up to 80 years while women reach an average of 84 years before the big sleep.3 These figures can change based on individual factors but keep in mind that numbers can’t hurt you – it’s your lifestyle, medical history, and other personal factors that will decide how long you live.
Life expectancy is a good indicator of longevity but don’t overthink it. Life insurance is best understood as a risk management product and is intended to help reduce the devastating financial impact on your family should you unexpectedly pass away. This is especially important if you have young kids or other financial dependents, or significant debts like a mortgage.
You can never really predict what life will throw at you in the long run, so it’s better to be prepared regardless of how long you think you might stick around. Plus, it’s always good to know the people who make your life worth living will have enough money to carry on the life you’ve built for them when you’re gone.