Special Events Increases in New Zealand Life Insurance
Typically life insurance policies are quite similar. This is in both the main function of the policies (which is to pay the life insurance sum you have insured in the event of death or terminal illness) and also in the features that are included in the plan. For example, often a life insurance NZ plan will incorporate an advance payment for funeral costs, inflation adjustment (so that the insured sum increases automatically with inflation), and often a financial planning benefit (which gives an additional sum, if the main New Zealand life insurance sum is paid out, to help with the cost involved in hiring a financial planner to advise on the best use of the life insurance NZ lump sum). Another common feature found in New Zealand life insurance plans is a ‘special events increase’ facility. A special events increase facility enables the insured person to increase their cover without having to provide further health information if they experience certain life events – like getting married or purchasing a house. This can be extremely valuable if a person’s health has gotten worse since they took out the policy (this can make increasing cover costly or in some cases not possible).
A special events increase operates in much the same way with most life insurers, however there can be differences. We will look at some of these.
First of all, if a New Zealand life insurance incorporates a special events increase facility, it will commonly expire at a certain age. This might be age 60 or 55 for example – and it can vary between insurers. Particularly if you are at an age that is near the limit, this is vital to check, as once a person is past the life insurance NZ plan’s cut-off age the special events increase is no longer usable. In many cases, depending on health, this can mean that increasing your policy can be hard, or impossible.
Next, the life events that “qualify” for the special events increase can vary by insurer. Some are found across all insurers – for example if an insurer offers a special events increase facility, it’s highly likely that marriage will count as a special event (as will divorce). Similarly, having a child or adopting a child will be recognized by most insurers.
However, there are some events that are not found in all New Zealand life insurance policies, or that differ. One is the case of a salary increase. With some life insurers, if you experience a salary increase you are able to increase your New Zealand life insurance under the special events increase facility. This is not offered by all life insurers though, and even when insurers do offer it, there can be differences. For example with some insurers the salary increase needs to be over $5,000, while with others it needs to be over $10,000.
In a similar way, the purchasing of property can be viewed differently. With some insurers, taking out a mortgage (whether for a home, rental property, vacation home, or even for a bare block of land in some cases) means that you can increase your cover under the special events increase provision. With other life insurers though, the mortgage can only be on a property that you intend to live in. If the mortgage is for any other purpose, then an increase is not possible.
A third example is a dependent starting tertiary education. With some life insurers if this occurs, an increase can be made – however many other insurers do not include this as a listed special event.
Special events increases can be a very handy (and at times very important) part of a New Zealand life insurance plan. So if an insurer you are considering offers this, it pays to make sure you understand how it works.
There are a lot of built-in features available when you take life insurance NZ policies. One of the most amazing features is special events increase which enables you to increase your New Zealand life insurance at the time of some life events which are considered by respective insurer.
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