Life is unpredictable and, while it's not pleasant to contemplate, it's essential to consider the potential ramifications of not having insurances in place should something unforeseen happen to you. This is particularly important if you’re an income provider for your household. In the unfortunate event of a person passing away or being unable to work for an extended period, the implications can be financially and emotionally overwhelming for the individual and their family.
Implications of an unprotected future
Without life insurance, the financial burden on surviving or supporting family members can be substantial. Funeral expenses, outstanding debts and the loss of a primary income source can lead to severe financial strain. In the absence of life, income protection, trauma or disability insurance you may experience a significant drop in household income, affecting the ability to cover daily living expenses and medical costs.
Insurance options in New Zealand
To safeguard against these uncertainties, it is important to explore the insurance options available in New Zealand.
The Accident Compensation Corporation (ACC) in New Zealand provides compulsory insurance cover for personal injury for everyone, whether a citizen, resident or visitor. So if you’re injured in an accident, the ACC may pay some of your medical and rehabilitation costs and could provide a regular monthly benefit while you are unable to work.
If your preference is to have insurance in place that is specific to you and your circumstances, below is a comparison of the benefits and considerations for the different insurance options available for you. You should always refer to the relevant policy document for details of the terms and conditions, eligibility criteria and any exclusions that apply:
| Insurance | Benefits | Considerations |
| Life insurance | Provides a lump sum payment to the policy owner if the life insured dies or is diagnosed with a terminal illness and is going to die within the next 12 months. Provides financial security for dependents, covers funeral expenses and can help settle outstanding debts like the mortgage, other loans, credit cards etc. | Your lifestyle and interests can increase your cost of insurance. Make sure you speak to your financial adviser about any dangerous pastimes you enjoy eg sky diving, motor car racing etc. which may have an impact on your life insurance application. |
| Income protection insurance | Provides an ongoing monthly benefit while the insured person is unable to work because of injury or sickness. Ensures a regular income during periods of incapacity to work so you can continue to meet your financial commitments. | Depending on the options you choose, you may have an extended waiting period before benefits will be paid to you. Additionally, premiums will depend on a variety of factors including your occupation. |
| Total and permanent disablement (TPD) | Provides a lump sum payment if the person insured becomes totally and permanently disabled, including from a disability that results in the inability to ever work again. This insurance could provide financial peace of mind after a life-changing event. It can be used to pay off your mortgage, help to cover medical bills or make essential modifications to your home. | You need to review your cover regularly to ensure that you have the right amount of cover – don’t set and forget your cover as it should change and evolve with you. Speak to your financial adviser when you have major life events, to ensure that your insurance is appropriate to your current situation. |
| Trauma insurance | Provides a lump sum payment if the person insured suffers one of the defined serious illnesses or injuries. From helping to pay your medical care to helping to cover your mortgage or household bills, you can choose how best to use your chosen amount. | Before taking out this insurance, be sure you understand what illnesses and conditions are included in your policy – this insurance is offered on a specified list of options. |
Where to get help
If you want or need more information, there are many resources you can reference. On our website you will find an overview of the products that we offer. The New Zealand government also provides valuable resources via agencies such as the Financial Markets Authority (FMA) and the Citizens Advice Bureau. These agencies offer insights into the types of insurances available, their benefits and how to make informed decisions. MoneyHub also provides the opportunity for you to research and compare insurance options – they offer calculators and a plethora of information that may help and guide you.
You can also seek help by consulting with a financial adviser, as they can provide personalised advice based on your individual needs and circumstances. A financial adviser can assist in understanding the available options, comparing policies and providers and finding the right solution for your needs.
Conclusion
Taking proactive steps to secure your financial future and that of your loved ones is important. Insurance can serve as a crucial safety net in times of adversity. While government assistance may be available, it may not fully cover all eventualities, so it's important to understand your options, seek professional advice and make informed decisions that will provide financial security and peace of mind for you and your family.
What you need to know
Resolution Life Australasia Limited ABN 84 079 300 379, NZ Company No. 281363, AFSL No. 233671 (Resolution Life) is part of the Resolution Life Group. The content on this website is for information only. The information is of a general nature and does not constitute financial advice or other professional advice. Before taking any action, you should always seek financial advice or other professional advice relevant to your personal circumstances. While care has been taken to supply information on this website that is accurate, no entity or person gives any warranty of reliability or accuracy, or accepts any responsibility arising in any way including from any error or omission.
