Pulse Advice - 2024
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When it comes to protecting your loved ones, life insurance is one of the smartest decisions you can make. But with so many options out there, it can be tough to figure out what works best for you. That’s why we have put together this guide to help you understand what life insurance is, why it’s important, and how to find the best policy to suit your needs.
What is life insurance?
Life insurance is a contract where you pay premiums, and in return, your family or estate recipients receive a lump sum if you pass away during the policy term. This payout can help cover debts, daily expenses, and future costs, providing financial security during challenging times.
Our Life Insurance Guide Covers:
The basics of life insurance
Why it matters
Key facts to know before buying
How to save money on premiums
Frequently asked questions
Life Insurance – Why It’s Important
Life is unpredictable, and financial hardship often follows the loss of a loved one. In New Zealand, one in 32 children will lose a parent before turning 18. Life insurance ensures that your family has financial support to manage mortgage payments, daily expenses, and even future education costs.
Personal Insurance – The Basics
Types of Personal Insurance:
Life Cover: Provides a lump sum upon death or terminal illness.
Trauma Cover: Offers a payout for serious illnesses like cancer or heart attacks.
Income Protection: Replaces up to 75% of your income if you’re unable to work due to illness or injury.
Total and Permanent Disability (TPD): Covers you if you’re permanently unable to work.
How Much Cover Do You Need?
A common guideline is to insure for 10 times your annual income. For example, if you earn $75,000 per year, consider $750,000 in coverage. Alternatively, you can use tools like the Life Insurance Calculator to factor in debts, dependants, and future expenses.
8 Must-Know Life Insurance Facts
1. Life insurance pays out a set dollar amount to your family.
The payout, also called the “Sum Insured,” is fixed, it can increase with CPI adjustments if you chose to. This ensures certainty for your loved ones.
2. Don’t have dependants? You probably don’t need life insurance.
If no one relies on your income, life insurance may not be necessary unless you want to leave a financial gift.
3. What should my cover amount be? How long should I have the policy for?
Insure for enough to cover your family’s needs until your children are financially independent or major debts are paid off.
4. In estimating your cover amount, add up:
Outstanding debts (mortgage, credit cards, etc.)
Immediate living expenses
Funeral costs (approx. $10,000)
Future costs (e.g., university tuition)
5. Should I get a joint policy with my partner or two single policies?
Joint policies often offer an easier claim experience for couples, but single policies offer more flexibility if your circumstances change.
6. The lower the risk of your death, the cheaper your life insurance.
Younger, healthier individuals pay less. Smokers and those with risky jobs may face higher premiums.
7. Ongoing full disclosure is essential.
Failing to disclose health conditions can invalidate claims. Always be honest about your circumstances.
8. Switching your policy may save you money.
Use comparison tools or speak to registered financial advisers to find better rates, but ensure the new policy covers all exclusions before cancelling your old one.
Life Insurance - Frequently Asked Questions
I’ve heard about “Family Protection Insurance” – what is it?
Family Protection Insurance provides monthly payouts instead of a lump sum. It’s great for young families needing consistent income.
Why do you suggest insuring for “10 times the salary of the highest earner”?
This rule ensures there’s enough money to cover living costs, debts, and future expenses, giving your family financial stability.
When should I get a life insurance policy?
As soon as someone relies on your income. Policies are cheaper when you’re younger and healthier.
I’ve been offered “critical illness cover” with my life insurance policy. Should I get this?
It depends. Critical illness cover only applies to specific conditions. Speak to an adviser to determine if it’s right for you.
Concluding Comments: Buying a Life Insurance Policy - Balancing Price and Coverage
Finding the right life insurance is about balancing affordability with comprehensive cover. Don’t be swayed by low premiums with high exclusions. Use comparison tools, and when in doubt, talk to an adviser.
About Pulse Advice
FAQs about Pulse Advice
Q: What services does Pulse Advice offer? Pulse Advice specialises in life insurance and KiwiSaver advice tailored to your unique needs. We focus on trust, clarity, and a personal touch.
Q: How does Pulse Advice help clients find the best policy? We take the time to understand your situation and use our expertise to match you with the right coverage.
Q: Why should I choose Pulse Advice? Our personalised approach, local expertise, and commitment to trust and transparency make us a standout choice for New Zealanders.
Protect your loved ones today by finding the best life insurance policy. For advice and support, reach out to Pulse Advice or use comparison tools to get started. Your family’s future is worth it.