How life insurance can become part of your legacy

In our New Zealand Seniors Legacy Report 2023, we discovered that the vast majority (80%) of us want to leave behind some kind of financial legacy for our loved ones.

The tricky part, especially with the cost-of-living crisis, is actually being able to live well in retirement and still leave something behind. Of those who do want to leave behind a financial legacy, 65% said it was to help others achieve greater financial security. 

So, what can you do if you want to leave that kind of gift but don’t have the financial means to do so? 

Providing financial security with life insurance

What is life insurance? For those uncertain about what life insurance is, life insurance in New Zealand provides a lump sum payout in the event of the policyholder’s death (or upon the diagnosis of a terminal illness). In case of a death (subject to eligibility criteria), that money goes straight to any beneficiaries on the policy. 

In other words, it can be one option for Kiwis looking to leave behind a legacy, even if they don’t have the kind of savings or real estate holdings to make that happen. 

One study found that not even half of all Kiwis even have a will, so setting up both a will and a legacy may be one way to pass something on to loved ones. Another question many Kiwis might ask is, should I buy life insurance?

How life insurance might safeguard your legacy

We recently spoke to Vicki Ammundsen, a trust and estate practitioner, who focuses on providing practical, reliable legal advice in New Zealand. When asked about any current trends she has noticed when it comes to people passing on wealth in light of economic uncertainty, she had this to say: 

“I am seeing a significant increase in parents wanting to transfer wealth before death… This can leave some people significantly financially disadvantaged in later years, especially if they require long term care, but do not qualify for state assistance due to having voluntarily disposed of assets during their lifetime,” Vicki explained. 

There’s a saying that you should never set yourself on fire to keep someone else warm. And even if that someone else is your child, consider other options before transferring wealth that you genuinely need for your retirement years. 

Planning for the future and how life insurance can help

One study found that approximately a third of Kiwis are not expecting to be able to leave a legacy they are proud of to the next generation. 

If your plan – or at least your goal - is to leave something behind, but the cost of living and retirement are challenging that goal, there are other options. 

Life insurance may be able to help provide a financial legacy for loved ones upon your passing, making it well worthwhile. 

When it comes to planning for the future by creating a will, Vicki had this advice to share: 

• Know your legal obligations. Be real about your dependents and wider family.
• Think about what your beneficiaries will hear as well as what you are saying. 
• Choose your executor(s) wisely – you are entrusting this person or these people with the balance of your life.
• Review your will – things change, people change. 
• Get competent legal advice. This is not a place to scrimp.

Exploring the emotional aspects of life insurance

As with anything to do with death (or even the eventual prospect of it), conversations and frank discussions can be both tough and emotional. 

However, our Cost of Death Report found that 88% of us believe there is a need to talk more about death and dying in New Zealand. 

With that in mind, Healthify highlights how talking openly and honestly can help to make sure you don’t feel isolated or lonely when discussing your own death. Even though it can be awkward, it can also help to have these conversations to set expectations and make your choices clear. 

Take a step in setting up your financial legacy by learning more about life insurance. You can request a Seniors Term Life Insurance quote today so you can rest assured that your family can have financial protection in place for a policy term of up to 20 years until you turn 85, whichever comes first.

This article is an opinion only, provided for general information purposes and shouldn’t be considered or relied upon as professional or personal advice. If you have legal, tax, or financial questions, you should contact an appropriate professional.

2 Oct 2024