As an insurance broker who’s been in the game for a while, I get asked a lot of questions. One of the more popular ones is, "How much does life insurance cost in New Zealand?" It’s a fair question, and spoiler alert: it’s complicated. Think of it like trying to guess how much a cup of coffee costs around the country. It depends on a lot of things.
So, let’s dive in and see what factors influence life insurance premiums and what you can expect when you're shopping around.
My rule of thumb though - you should never spend more than 5% of your income on personal risk insurance (Life insurance, Income protection, Trauma insurance, Mortgage protection etc).
Factors Influencing Life Insurance Costs
Age: The younger you are when you get a policy, the cheaper it tends to be. It’s like booking flights early—procrastinators pay more. Bear in mind though, younger people often aren’t the best candidates for life insurance, as they may not have as much to protect just yet.
Health: If you’re in tip-top shape, you’ll pay less. Your current health status and medical history play a big role in determining your premiums. Non-smokers and those without chronic health conditions typically enjoy lower rates. Conversely, if you have pre-existing health issues, you might face higher premiums.
Lifestyle: Love extreme sports? That’s awesome, but your insurer might charge you more for that adrenaline rush. Same goes if you have a dangerous job. Office workers, you’re in luck!
Policy Type and Coverage Amount: The more bells and whistles you add, the more you’ll pay. Want a policy that covers every possible scenario? Expect more comprehensive policies and higher coverage amounts to naturally lead to higher premiums.
Gender: Yes, even your gender plays a role. Statistically, women live longer than men, so they often get slightly lower premiums.
Smokers: Smoking is a significant risk factor, and smokers can expect to pay considerably more for life insurance compared to non-smokers. Quitting can be a win-win for your health and your wallet.
Average Cost of Life Insurance
While it’s tough to give exact numbers because everyone’s situation is unique, here are some rough estimates:
Young Non-Smoker (aged 25-35): For a $500,000 term life insurance policy, you might be looking at NZD 50 to NZD 70 per month. Less than your monthly coffee habit, hopefully.
Middle-Aged Non-Smoker (aged 36-50): Expect to pay around NZD 150 to NZD 250 per month. Think of it as a small price to pay for peace of mind.
Older Non-Smoker (aged 51-60): Premiums can range from NZD 250 to NZD 500 per month or more.
Smokers can expect these figures to be about 50-100% higher.
Tips for Reducing Your Life Insurance Premiums
Start Early: Get your policy before your hair starts going grey. Your wallet will thank you.
Maintain a Healthy Lifestyle: Live a healthy lifestyle and avoid smoking. Your body and your insurer will appreciate it.
Compare Policies: Ask your broker for quotes from a few different insurers. Compare them all to find the best deal.
The cost of life insurance in New Zealand isn’t a one-size-fits-all deal. It depends on your age, health, lifestyle, and the type of policy you choose. My job as an insurance broker is to help you make sense of it all and find the best policy for you without any headaches. Remember, a bit of planning and some healthy habits can make a big difference in your premiums.
Got questions or need some personalised advice? Don’t hesitate to reach out. I’m here to help you navigate the world of life insurance so you can protect yourself and your family, without breaking the bank.
As final note: when you buy insurance products, you have certain rights, and rest assured, the insurance provider you opt for has obligations to make sure you're treated fairly, and those products suit your needs. The FMA monitors both insurers and the insurance advisers like myself to ensure we are delivering those outcomes.
If you’d like to have a no obligations chat, give me a call, or fill out our contact form and I’ll reach out to you myself .
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