Protect and Save

Life Insurance Basics: What is Life Insurance

In order to choose the right life insurance policy and cover in New Zealand, it is important to gather some valuable information. You need to protect yourself and your family as well as making sure you are able to afford the premiums. Here is some information that can help you compare policies, and choose the right level of coverage.

Simple level term insurance

This life insurance policy lasts for a specific number of years. It pays out only if you die within the term. According to financial experts, this policy is considered best for people with dependants, and individuals with a mortgage. 

Pros - Affordable and simple to understand.

Decreasing term insurance

This insurance policy is also called mortgage protection policy. It has been designed to be linked to your repayment mortgage when the outstanding balance reduces over time. This policy lasts for a specific number of years, and pays out if you die during this period.

However, for each passing year, your potential payout decreases. This can cause some problems. The policy is ideal for people with a repayment mortgage whose dependents are able to manage other expenses without any help. 

Pros - Very affordable.

Cons - Often covers only your mortgage balance. 

Family income benefit insurance

Just like a decreasing term, this one also pays out a regular income for the policy’s remaining term. This life insurance policy is considered perfect for families whose dependents may experience financial problems after the breadwinner dies. 

Pro - Affordable for most people. 

Whole-of-life insurance

This life insurance policy covers you for the duration of your life. With this policy, your dependents receive the payout regardless of when you die. The policy is best for people who own large estates, and want to plan to maximise their inheritance tax benefits. The Insurance Advisory Group of NZ can give you more information about a Whole- of- life insurance policies.

Pro - Good if you can keep up with your premiums and your dependents are guaranteed a payout to avoid potential financial problems when you die.

Con - More expensive than short term policies.

Pension term insurance

This policy works just like regular term insurance. However, insurance policies purchased before a specific year have some tax benefits. As the name suggests, this policy is perfect for people who are no longer available for insurance policies, but who purchased a policy before 2007 and want to gain some tax benefits 

Pro - Provides you with some tax benefits.

Before you purchase a life insurance policy, you should spend a lot of time on your research. It is important to compare life insurance in NZ to make the best choice. You should not just rush into making a decision. These days, you can choose from many different service providers so it is important to make an informed choice.

With the information provided in this guide, you will be in a better position to make an informed choice however for more in depth and specific advice visit www.discountlife.co.nz. The insurance team at Discount Life will compare insurance quotes throughout NZ to help you make the best choice for you and your family.

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