We’re proud to look after New Zealanders like you and we’re all about protecting your way of life. We realise times are hard for many New Zealanders. We’re all feeling squeezed by the cost of living, with everything seemingly going up and up.
We’ve created this handy guide on what you could do to help keep control of the cost of your cover.
Looking to update or make changes to your policy?
Before you make any changes to your cover, we recommend you speak to your financial adviser. They can help you match your needs with suitable type(s) of life insurance and an amount of cover that works in line with your needs and your budget.
Don’t have a financial adviser? We can help you find one.Find a financial adviser.
Things to consider.
When you take out your life insurance, you’re given a choice about how you want to pay. If the cost of your cover generally increases each year, your cover is likely age-rated. This means that at your annual renewal, you’ll tend to see an increase in the premiums you pay for the next year ahead. Age-rated cover takes into consideration that as we age, we increase our risk of getting sick, becoming disabled or dying. Read more about the medical data and statistics that underpin this.
To set annual premiums, we look at a range of data – population, insurance industry and our own data – to determine the likelihood of claims. This statistical analysis guides decisions about life insurance price increases.
Your price change is made of 3-main factors:
- Age-rated – every year as we age, we generally pose more risk as our likelihood of making a claim increases.
- Consumer Price Index or CPI – this is an option that many people choose to include in their policy. The plus side is the amount you’re covered for goes up to help protect against the effects of inflation, but this is something that is paid for as part of your increase.
- The base price of the cover – one of the things we need to balance is to ensure the money we receive from premiums, are enough to ensure claims can be paid to customers. This means the base price of the cover can change, to ensure that customers are covered for the long term.
The amount you’re insured for is one of many factors that determine how much you pay for your life insurance. If you chose to take out an amount of money that covers your mortgage it may be worth checking if this still lines up with the value of your mortgage. Reducing the amount you’re covered for is one way to reduce how much you pay.
Your health and lifestyle are key factors used to determine the amount you pay. Have you stopped smoking or had an improvement in an underlying health condition? Let us know if you have, this may reduce the amount you pay.
For some types of life insurance, you choose a claim wait period when you take out the cover. A waiting period is how long you’ll wait to receive payments once you have met the claim definition. When you take out the cover, you also decide how long you want benefit payments to continue for once your claim is accepted. This is called the benefit payment period.
Both the waiting period and duration of payments affect how much you pay. A longer wait period and a shorter benefit payment period cost less, but this could also leave you short on income if a sickness or injury carries on. As always – this is something you should talk to your financial adviser about, to see what’s best for you.
The Consumer Price Index (CPI) is a measure of inflation, that indicates increases in the cost of living for New Zealand households.
The most recent measurement (December 2022) indicates an annual inflation rate of 7.2%.
To help the value of what you’re insured for keep up with cost of living, many New Zealanders choose an additional option, when they take out their cover, known as a CPI benefit or inflation protection. This means, each year your sum insured increases, and this cost is added to your annual premium increase.
Removing a cover type is of course another option, though there are pros and cons in doing so. Before you make any changes, speak to your financial adviser as they can provide you the benefits and risks, this option pose. Whilst it can sound attractive to save money today, you should consider where this leaves you in the future.
When life changes, so should you cover. Here’s a list of a few other reasons that should prompt you to review your cover.
- Starting a new job or a having a change in your employment status.
- Moving in with a partner.
- Getting married.
- Separating from your partner or getting divorced.
- Buying a new home or investment property.
- Becoming a parent, guardian or caregiver.
- Your kids are no longer financially dependent on you.
- Going into business for yourself.
Concerned about paying your premiums?
We realise times are hard for many New Zealanders. If you’re facing financial difficulty and concerned about paying your premiums, there are options available that can help lighten the financial load and keep your policy in place, while you get back on your feet.
What support is available?
Depending on the type of cover you have, it may include options like:
Premium holiday option.
This is where you can temporarily pause your cover and your premium for up to 12-months. When you’re ready, you can simply reinstate this cover by giving us a call – no further health questions or information will be required.
This is available for: select Life, Survivor’s income and TPD covers.
Leave without pay option.
This is where you can temporarily pause your cover and your premium for up to 12-months. When you’re ready, you can simply reinstate this cover by giving us a call.
This is available for: select Income protection and Monthly mortgage repayment covers.
Check your policy wording to see if these are included.
It’s important to know that while your cover is suspended, there’s no protection in place. This means we won’t pay a claim for any new sickness or injury that occurs, or you get signs or symptoms of, during the time your cover is temporarily paused. Terms and conditions apply – please refer to your policy documents for more details.
Premium deferral – this is where if you’re facing financial hardship, your cover can remain in place, but payments can be delayed for a set period of time. Talk to your adviser or give us a call to see if you qualify for this.
Other ways we might be able to help.
There may be other things we can do to help you. It’s important to talk to your financial adviser in the first instance, they can provide you with personal advice for your specific circumstances.
We're here if you need us.
To discuss your options, or if you have any questions or concerns about paying your premiums or keeping your policy in place, please don’t hesitate to contact your financial adviser or our Customer value team on 0800 88 22 88 – we’re here to help.