Learn more about different types of insurance from a licenced financial adviser and see what's best for your circumstances.
Health | Life | Trauma | Total and Permanent Disability | Income Protection
What is family life insurance?
Taking out family life insurance means you can secure your family's financial future with confidence. It’s a comprehensive solution that covers the lives of multiple members of a family under one plan. With a single policy, you can insure your entire family unit, providing the peace of mind of knowing they will be taken care of should their primary income earner pass away.
Do you need family life insurance?
Life insurance is a promise to secure your loved ones' future on death. Here's why it matters:
- Financial security: Life insurance provides a financial backup for your family if you die. If you become terminally ill and are likely to die within 12 months, you may receive an early payout.
- Debt protection: Helps cover debts, rents, mortgages, loans, medical expenses, and costs related to end-of-life care. It relieves the financial stress on your loved ones, allowing you and your family to focus on making the most of your remaining time.
- Income replacement: Helps replace the income of the deceased, enabling the family to maintain a similar lifestyle to that if the life assured had continued working until retirement.
- Education support: Ensures your children's education remains uninterrupted.
- Funeral costs: Eases the financial strain by covering funeral expenses.
- Peace of mind: Knowing that your loved ones are taken care of even after you're gone offers invaluable peace of mind.
Choosing the best family life insurance policy
To choose the best family life insurance, there are several factors to consider, including:
- your family’s size and the number of dependents you have
- any health concerns, and
- the affordability of the policy.
The right policy depends on your needs and circumstances, so compare life insurance policies and providers to find one that suits your budget and offers the protection you need.
There is one main type of family life insurance available in New Zealand, offering cover for a specific period and lower premiums (‘term life insurance’); and two sub-types:
- Level life insurance: This is a type of life insurance that provides a fixed (‘level’) premium amount of cover for an agreed period of time and at a higher cost.
It guarantees a consistent payout throughout the term without any increase or decrease in premiums.
- Stepped life insurance: A type of life insurance that provides a premium that is recalculated each year based on your age at your policy anniversary.
This usually starts with lower premiums than level life insurance, with premiums increasing yearly (‘stepped’). There will be a point in the future where stepped premiums will cost more than level insurance premiums.
Book a time with a Policywise adviser to determine which type of life insurance structure is right for you. Deciding on the right policy wording for your family's needs and financial situation is of great importance and requires careful consideration and expert guidance.
Who needs family life insurance?
Family life insurance is essential for anyone with loved ones who rely on their income. Here are some scenarios in which family life insurance can be beneficial:
- Single-income families: If you are the sole breadwinner in your family, taking out life insurance is a practical decision to ensure that your family is protected financially should you pass away.
- New parents: Having a new child is a life-changing experience that often prompts parents to think about their family's financial future. Life insurance for young families can provide peace of mind, knowing that your child will be taken care of in the event of your untimely demise.
- Blended families: Families with stepchildren or adopted children may have unique financial situations that require specific life insurance cover.
- Solo parents: For single parents, life insurance is even more critical as there is no second income or backup breadwinner to fall back on in case of an emergency.
- Children: While it may seem counterintuitive, life insurance for children can be a positive step. If a child is diagnosed with a serious (terminal) illness, some policies offer a cash benefit that can help with medical expenses and other living costs, just in case you have to take an extended time off work to look after them.
Determining how much life insurance will cover your family's needs can be challenging, and factors such as income, debt, and expenses all play a role. It is a wise idea to consider your family's requirements and speak with a life insurance adviser.
Life insurance options for members of the whole family
Life insurance for couples
Couples have two options to protect themselves in case of unexpected death: a joint life insurance policy that covers both partners or purchasing separate policies that complement each other's cover. To make the right choice, couples should consider factors like their budget, the type and amount of cover required, and any existing health conditions.
Life insurance for solo parents
Solo parents can protect themselves with a well-designed life insurance policy in case of unexpected death and have the proceeds of the policy get paid out to their children or family estate, with significant assets earmarked to pass on to their children or other beneficiaries.
Life insurance policies for children
New Zealand parents with existing life insurance policies can provide limited cover for their children up to a certain value, depending on the wording of their policy. Parents may also want to consider purchasing add-on benefits for their children, such as terminal illness or trauma cover. These policies can provide financial protection for the child and may also help them obtain life insurance cover as an adult, regardless of their health or occupation.
LIFE INSURANCE PLANS FOR PARENTS OR GRANDPARENTS
Parents and grandparents in New Zealand may want to consider purchasing life insurance policies that provide cover for their children or grandchildren.
INCOME PROTECTION INSURANCE
Family protection insurance safeguards your loved ones’ financial stability by providing a monthly income for a specific period if you pass away due to an accident or illness. It ensures that your family has the funds to cover their living expenses, bills, and other financial commitments, and maintain their standard of living even after you’re gone.
Customising your policy
Certain features can be added or included in your cover to provide extra protection and benefits. New Zealanders can choose from several types, such as:
- Total and permanent disability: Provides an additional financial lump sum benefit if the policyholder becomes totally and permanently disabled and is unlikely to ever work in their occupation again.
- Trauma insurance/critical illness: Pays a lump sum if the policyholder is diagnosed with a covered condition or illness under the policy. The most frequent claims are for cancer, heart attack, or stroke. Kids can be covered under this policy also or added separately under their own cover.
- Private medical insurance: Allows you to skip public hospital waiting lists and get treated privately, faster, for any approved treatment and conditions covered under the policy.
- Income protection/mortgage or rent insurance: Provides a monthly payment of up to 75% of your income if you are diagnosed with an illness or disability where you cannot work more than 10 hours per week or do 75% of your pre-disability tasks.
- Waiver of premium: Waives premium payments if the policyholder suffers a disability.
- Future/guaranteed insurability: Allows policyholders to purchase more cover without medical underwriting.
- Waiver of premium: Waives premium payments if the policyholder suffers a disability.
In New Zealand, certain types of family life insurance benefits can be helpful, including:
- Child benefits: Although life insurance for children is limited until age 10 in New Zealand, there are options, such as terminal illness cover and trauma cover, that can be taken out for children between the ages of 0 and 10 years old. With some providers, you can take out up to $500,000 of cover on a child which can be converted to other covers once they get over a certain age
- Dependent child funeral support benefit: Provides a lump sum of up to $15,000 for a child’s funeral subject to the terms and conditions of the cover.
Careful consideration should be given before adding benefits to a policy as they come at an additional cost. Be sure to review the terms and conditions of each benefit. Our experienced insurance advisers can help you determine if these add-on benefits fit your family’s specific needs and if the added cost to your policy is justified by the potential payout.
Policywise: your partner in making wise insurance decisions
Policywise is a 100% free service which tells you which health, life, and disability insurance provider best fits your needs. We offer fast, comprehensive, and easy-to-understand comparisons of all leading providers, and a simple summary clearly recommending which insurer is best for your situation.
Not all insurance policies are the same. Policywise can help you sort out the duds, avoid the lemons, understand the fine print and exclusions, and get the right insurance for you and your family.
We make the important decision of where to buy your insurance super easy. We’ll answer your questions, provide experienced advice, quotes, and comparisons, and manage all the back and forth throughout the application process. Taking out your cover through us means you'll have our lifetime support and claims advocacy, and we'll help you negotiate a positive outcome at claim time. We can also take care of lodging any claims on your behalf and back you up if the going gets tough.
Check out the reviews on our homepage for how other New Zealanders have found our service because now is the time to get your family life insurance sorted. Give your family or someone you love the most outstanding financial support possible. Book a 5-minute callback with Policywise today; our service is fast and free.
Comparing life insurance products from New Zealand insurers
Download our FREE comparison guide to selected life insurance plans from New Zealand’s most trusted insurers.
Talk to a Policywise adviser for more information on these plans and other insurance products such as trauma insurance, income protection, and total permanent disability cover.