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How much life insurance cover do I need in NZ?
There’s no magical number when it comes to life insurance cover – the amount you need will depend entirely on your circumstances and preferences. To decide what’s right for you, consider how much your dependents or partner may need to pay off debt and continue to enjoy the same or similar quality of life after you’re gone. These calculations may include:
- The amount of debt you have, such as your mortgage, and your financial obligations. Your family’s total cost of living, including childcare costs, education fees etc.
- The total cost of your funeral. The average cost of a funeral in NZ is $10,000, according to New Zealand Seniors.
Many opt to cover the entire amount of their mortgage, while others choose to cover that plus all living costs until their children reach a certain age (for example, when they reach 21 years old). Once you’ve worked out a number and arranged life insurance, it’s important to review your policy every few years or whenever your circumstances change, such as a property purchase or sale, birth of a child or the start of a new relationship.
How does life insurance work?
Most life insurance policies have a shared purpose – to provide a monetary payment to your loved ones if you pass away, with the amount being decided by you (the cover). But when you’re looking to get life insurance, or wanting to see if your current one is still right for you, it’s worth digging deeper to make sure you fully understand your policy.
Always check your policy to make sure you understand what’s covered and excluded, what the premiums are, how they may increase and how claiming works. And when you’re applying make sure you disclose all relevant information as failure to do so may result in cancellation of your policy or difficulties when it comes to payments being made.
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