Life insurance, in plain terms.

There’s no single formula, but the useful way to think about it is: what would your family need money for if you weren’t here?

Usually that’s four things. Clearing the mortgage and other debt so nobody loses the house. Replacing the income your family relied on, for as long as they’d need it. Immediate costs like a funeral and the practical mess that follows a death. And anything you’d want to fund that you won’t be around for, like getting children through school.

Then subtract what you already have. Existing cover, savings, KiwiSaver, and whatever your partner earns.

Some people use rough multiples of income as a starting point. It’s a reasonable sanity check and a poor substitute for actually doing the sums, because a couple with no children and a small mortgage has a very different need from a single-income family of five.

It depends heavily on your age, your health, whether you smoke, how much cover you want and how the premiums are structured. Two people wanting the same cover can pay very different amounts.

Age is the biggest driver, and it only moves one way. Cover bought at 30 costs meaningfully less than the same cover bought at 45, and that difference carries through the whole life of the policy.

Smoking is the next biggest, and it’s usually dramatic. Most insurers will reprice you as a non-smoker once you’ve been off it for twelve months, which is worth knowing.

We won’t quote a figure here because any number would be misleading without knowing your situation. If you want a real one, ask us and we’ll get you actual quotes.

It depends entirely on whether someone would be financially worse off without you. If nobody depends on your income and you have no debt that would fall to others, the case is weak. If a mortgage, a partner or children rely on what you earn, the case is strong.

The awkward truth is that most people who hold life insurance never claim on it, and that’s the point. You’re not buying an investment. You’re buying certainty that if the worst happens, your family’s problems stay emotional rather than becoming financial as well.

It’s worth reviewing rather than setting and forgetting. Cover that made sense with a big mortgage and young children may be more than you need once the loan’s gone and the kids have left.

Personal life insurance payouts are generally not treated as taxable income in New Zealand. The beneficiary usually receives the full sum insured. In return, you generally can’t claim a tax deduction for the premiums you pay.

There are situations where it works differently, particularly where a business owns the policy or where cover is tied to a commercial arrangement like a shareholder agreement or key person cover. The tax treatment there depends on how it’s structured.

If your cover sits inside a business or trust, get it reviewed by an accountant. Getting the ownership structure right at the start is much easier than fixing it at claim time.

Often yes. Having a health condition doesn’t automatically shut the door, and a lot of people assume it does and never apply.

Insurers respond in a few ways. They might offer standard cover if the condition is well managed or historic. They might apply an exclusion, so that specific condition isn’t covered but everything else is. They might charge a higher premium, called a loading. Or they might decline.

Different insurers view the same condition differently, which is one of the real benefits of going through an adviser rather than straight to one company. We know which insurers tend to take a more reasonable view of what.

If you’ve been declined before, it’s worth trying again. Underwriting attitudes shift, and a condition that’s been stable for five years reads very differently from one diagnosed last month.

Life insurance pays a lump sum to your family if you die. They can use it for anything, including clearing the mortgage.

Mortgage repayment cover is different. It pays a monthly amount to help cover your loan repayments if you can’t work because of illness or injury. It’s about you being alive but unable to earn, not about you dying.

The confusion comes from banks selling life cover under a “mortgage protection” label. If someone’s offered you mortgage protection, ask specifically: does this pay a lump sum on death, or a monthly amount if I can’t work? They solve different problems and plenty of households need both.

Stepped premiums start lower and rise as you get older, usually every year. Level premiums start higher and stay flat, or rise much more slowly, for a set period.

Stepped tends to suit cover you expect to reduce or drop off. Cover tied to a mortgage you’ll clear in fifteen years, for instance. You pay less in the early years when money is tight.

Level tends to suit cover you expect to hold for the long haul. You pay more now, but you avoid the steep increases that hit stepped premiums in your fifties and sixties, which is exactly when people cancel cover they still need.

The crossover point matters. There’s a year where the total you’ve paid under each option evens out, and if you cancel before then, stepped was cheaper. That calculation is one of the things we run for people.

Maybe not, and it’s a fair question to ask.

The test isn’t children. It’s whether anyone would be financially worse off if you died. A partner on a joint mortgage would be, because the whole loan lands on one income. A business partner might be. A parent who co-signed your loan or depends on your support would be.

If you’re single, renting, with no dependants and no debt that falls to anyone else, life cover is probably not your priority. Income protection and trauma cover often matter more at that stage, because the risk of being unable to work is higher than the risk of dying.

One thing worth weighing: cover is cheapest and easiest to get when you’re young and healthy. Some people take a modest amount early to lock in the price and the health rating, before life gets complicated.

This is the most important question on this page, and it doesn’t get asked enough.

When you apply, you have a duty to tell the insurer everything relevant to their decision. If something material is left out, even by genuine accident, the insurer can potentially decline a claim or cancel the policy. Your family finds out at the worst possible moment.

“Material” is broader than most people expect. It’s not just diagnosed conditions. It can include tests you had, symptoms you mentioned to a GP, specialist referrals, and things you thought were nothing.

The rule we give every client is simple: if you’re not sure whether to mention it, mention it. Over-disclosing costs you nothing. An insurer that knows about something and accepts you can’t later say they weren’t told. If you already have cover and something’s nagging at you, tell us. It’s usually fixable now and much harder later.

Most New Zealand life policies exclude death by suicide within a set period after the policy starts or is materially increased, commonly the first thirteen months. After that period, cover generally applies.

Terms vary by insurer and by policy, so the specific wording on your policy is what counts, not a general summary.

If you or someone close to you is struggling, please talk to someone. You can call or text 1737 any time to speak with a trained counsellor, free. Lifeline is on 0800 543 354. These are real people and they’re there for exactly this.