New Zealanders who want to provide some financial support for their loved ones after they die, often choose to take out a life insurance policy. It ensures their family are left a cash lump sum should the worst happen, and it can offer them and their family real peace of mind. If you’re considering life insurance then it’s important you understand the costs involved first. So, you can plan effectively and within your budget. Here we look into what life insurance typically costs in New Zealand and what factors might impact your premiums.
Determining the Cost of Life Insurance
The cost of life insurance can vary based on a range of factors. These include your age, health, the level of cover you choose, and other personal details. Premiums are usually higher the older you are or if you have certain health conditions, but there are different ways you can help keep costs down.
What Influences Life Insurance Premiums?
There are a number of factors that determine how much you pay for your policy…
Age at Application
Age plays an important role in determining how much your premiums are. Generally speaking, the younger you are when you apply, the lower your premiums will be to begin with. This is because insurers see younger applicants as lower risk. Due to changes in health as we get older, it may even become harder to get any cover at all. So, getting cover sooner rather than later can be a wise choice. It’s important to consider life insurance providers that can help provide you with the best cover for the stage of life you’re in.
Benefit Amount
The benefit amount is the cash lump sum your policy will pay out to your loved ones after you die. You should look for cover that will provide a big enough payout to cover the financial needs of your loved ones, without overextending your budget.
Your benefit amount or the level of cover you choose, plays a big part in determining how high your premiums are.
Health Status
Your health can play an important role in the cost of your life insurance premiums. When insurers assess your health, they’re working out the risk they take on when offering you cover. This means if you’re healthy, with no serious medical conditions, you're seen as less risky. This typically means you pay smaller premiums. However, if you have pre-existing health issues or a history of chronic illness, you may have to pay larger premiums, to offset the higher risk to the insurer. Maintaining a healthy lifestyle and managing any existing health conditions can help reduce your premiums.
Gender
Your gender will impact premiums too. Women often pay lower rates due to longer life expectancy.
Smoking Status
Smokers generally have higher premiums than non-smokers due to the increased health risks associated with smoking.
Inflation Protection
With the costs-of-living increasing over time, it can be helpful to find cover that increases your benefit amount each year. This will also result in higher premiums paid each year, but it may help your policy maintain its real value over time. With Golden Life Insurance you have the option of a 3% Automatic Benefit Amount Increase feature. It’s applied once a year on the policy anniversary, to help your policy keep up with rising living costs. If you choose this feature, you can opt out of it at any time.
Optional protection – add-ons/riders
Adding extras such as critical illness to your insurance policy, can affect your life insurance premium too. While this extra cover enhances the breadth of your cover, it typically results in higher premiums.
How much cover should I take out?
When you’re working out the right amount of life insurance cover to take out, there are several factors you could think about. It’s worth remembering though that your age and any health conditions may determine the maximum amount of cover you can take out.
To calculate what level of cover you need, firstly think about your family's financial needs and how much support you'd like to provide. Take funeral costs into account and what you may want to leave for your family’s living expenses. Is there a mortgage or any debts your family will need to cover? Consider your existing savings and assets and whether or not they would cover all these expenses.
You should also consider inflation, as living costs tend to rise over time. The life insurance cover you take out today may only take your family so far when the time comes. Lastly, what premium size can you afford now and in the future? Striking a balance between adequate cover and affordability is always important.
How do I reduce the cost?
Reducing the cost of your life insurance can be done in various ways, including…
Choosing a Lower Benefit Amount
Opt for a size of payout that aligns with your actual day-to-day expenses, as higher cover leads to higher premiums.
Keep it Simple
If you avoid taking out any extra add-ons with your policy can help keep the cost down.
Reviewing and Adjusting Cover
Regularly review what your cover needs are. If they’ve changed you can adjust your policy accordingly, to avoid overpaying.
Make your golden years shine with Golden Life Insurance
Finding the right life insurance policy is all about balancing affordability with the peace of mind that your loved ones will be financially supported when the time comes.
If you’re a New Zealand resident aged 40-80, you can apply for a Golden Life Insurance policy with no medical exams or blood tests required. There are no complicated forms to fill in. You simply answer a few health and lifestyle questions and you’re all set.
If you’re interested in helping give your loved ones a brighter tomorrow, simply give our team of life insurance specialists a call. Whether you want to get your cover in place, or you simply have questions, we’d be delighted to help. Just give us a call on 0800 110 038 and you can arrange everything over the phone in minutes.