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Life Insurance Basics

How health, lifestyle, and smoking determine premium costs –  how you can get the cheapest premiums and how life insurance can work as family protection insurance for future generations financial heritage.



What is life insurance?

Life Insurance is sometimes used as a general term for all the policies that life insurers offer.

To break it down, life insurance comes in many shapes and forms. And here are the most common ones:

  • Life Insurance: sometimes called death benefit
  • Accident Death Insurance: pays a lump sum if you die in an accident
  • Trauma or Critical Illness: pays a lump sum if you are diagnosed with a specific illness
  • Income Protection Insurance: secures a monthly income if you cannot work due to illness or accident
  • Mortgage Protection: pays a tax-free monthly benefit to cover your mortgage




Benefits and features to watch out for:

  1. Terminal Illness Benefit: If you are given less than 12 months to live, you are paid out the life insurance lump sum immediately.

  2. Guaranteed Policy Wording Upgrade: Your policy is upgraded and your claim will be assessed on the latest favourable wording.

  3. Exclusions: The most common exclusion is suicide within 13 months from the commencement of a policy.

  4. Funeral Advancement Benefit: An early payout lump sum is paid to cover funeral expenses. Often $15.000

  5. Inflation Indexation: An adjustment for inflation each year.

  6. Future Insurability Options: Some policies will allow you to increase the sum insured without further medical evidence when special events happen in your life.

  7. Waiver of Premium: For a little extra, your premium will be waivered if you suffer a disability and can not work.


How does a pre-existing condition affect life insurance?


A pre-existing health condition such as heart disease, stroke, weight, cholesterol, cancer, high blood pressure, diabetes, pre-diabetic, kidney and liver disease in itself might not be a reason for declined life insurance.

The life insurance broker knows how the different insurance companies define pre-existing conditions and how pre-existing health conditions are dealt with on a case-by-case basis by life insurance companies.

Life insurance is a legal document and you have a legal duty of disclosure.

An independent, trustworthy insurance broker has the know-how and experience to quote you the best life insurance deal from the top life insurance companies in New Zealand.

Honesty is the best policy.

It might be tempting not to disclose a medical or health condition.

Be open and honest to your life insurance broker, and in return the broker works for you to quote you the best policy that suits your needs.