6 of the most common life insurance questions answered
Published on Tue Nov 8 2022 in Money
Life insurance can be confusing, especially if you’ve never had a policy before. You may think that your questions are too basic or “silly” to ask, or that you’re the only one who doesn’t know the answer. However, we can tell you that as silly as you may feel, you’re probably not the only one asking!
We understand firsthand the challenges people often face when looking for life insurance. Our team answers questions both big and small from Kiwis all over New Zealand. Over the years we’ve noticed a few that keep popping up. Here are answers to six of the most common life insurance questions we hear.
How much cover do I need?
This might be the most common insurance question, but also one with no one right answer. As life insurance is designed to help protect the financial future of your loved ones if you were to pass away, how much cover ‘is enough’ will depend on what your family needs and household budget. Since no two people are alike, everyone’s “magic number” will be different!
When deciding how much cover to get, you may want to ask yourself a few questions:
• How much money do I and my partner currently make?
• What will the life insurance benefit be used for?
• How long should the money last?
• Do I have enough in other savings or KiwiSaver to cover my family?
These questions could be a good starting point as you think about your life insurance needs.
What type of policy should I get?
There are two types of life insurance policies available in New Zealand: life insurance and funeral insurance.
Life insurance is typically designed with young families in mind. In the event of an untimely death or terminal illness diagnosis, they may need more ongoing financial support to help cover large debts (like a mortgage), replace a lost salary, or pay for a child’s education. Some life insurance policies also offer additional benefits that provides you with cover in the event of a serious illness or injury.
Funeral insurance is often considered by older adults, such as those heading into retirement. They’re less likely to be leaving behind large debts, but may want to help cover the cost of their funeral and any other final expenses that their family may have to pay for as they mourn.
The type of policy you get may depend on how you want the money to be used, how old you are and your budget.
How much does life insurance cost?
The easiest way to answer this question is to request a free quote.
Since there are many factors that can impact the cost– such as the type of policy you choose, your age when taking out cover, and your overall health– getting a quote is often the simplest way to see exactly how much you’ll pay.
One thing we’d like to point out is that people all over the world, including Kiwis, tend to think that life insurance costs more than it actually does1. When you see your quote, you might be surprised by how affordable it can be!
Do I need to see my GP when I apply?
For Momentum Life’s funeral insurance, the answer is no. There is no medical check when you apply. In fact, we only need to ask a few quick questions to issue your quote and set up the policy.
Life insurance is a bit different. We do need to ask more questions during the application, including some about your health and medical history. Depending on the answers you give, we may ask to follow up with your GP or a specialist for more information or to double check some details.
Who can be a beneficiary?
This one’s easy – you can choose any person you like to be a beneficiary of your policy!
Many people choose family members as their beneficiaries, often a spouse or partner, their children or even a parent. However, you are free to name any person you would want to receive the money (or a portion of it).
You can also change your mind about this at any time. There is a bit of paperwork needed to update your beneficiaries, but we’re happy to talk you through it if you ever decide to make a change.
If a nominated beneficiary is under the age of 18 when a claim is paid, the payment will be made to the minor’s legal guardian.
Do I really need life insurance?
The choice to get a life or funeral insurance policy is a personal one, and there are many reasons why people decide to take out cover.
One reason we often hear is that people want to provide some “peace of mind” for their family and themselves. If the worst were to happen, they’d like to know that their loved ones would be protected financially– that money would be one less thing they’d need to worry about.
We also hear this from the families themselves at claim time. It can be a real weight off their shoulders knowing that money is there to help take care of things like funeral expenses and debts, or that they won’t need to dip into their own savings during what is often a difficult time.
Momentum Life can help
So, are you ready to get covered? Whether you’re keen to set up a policy, or still have a few questions, we’re happy to help! Give us a call or request a quote to get started.
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About Author: Momentum Life is a leading provider of Life insurance and Funeral insurance in New Zealand.
1. FSC - Gambling on Life - The Problem of Underinsurance - January 2020
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The content provided in this article is for information purposes only. The information is of a general nature and does not constitute financial advice or other professional advice. To the extent that any of the content constitutes financial advice, it is limited to Momentum Life products only and does not consider your specific financial needs or goals. You should consider whether the information is appropriate for you and seek independent professional advice, if required.
All product information is correct at the time this article was published. For current product information, please visit the Momentum Life website.