What are the different types of life insurance?

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In New Zealand, life insurance can be divided into many categories, each with its own benefits and key considerations. Knowing what they are and how they differ may help give you the confidence to choose the option that best suits your needs.

Life insurance can refer to:

Term life insurance: This will provide cover for a specific period, for example a fixed number of years or until you reach a certain age, whichever comes first.
All of life insurance: This cover is valid for as long as you live and continue paying premiums or make a full payment claim. If you decide to cancel and stop paying premiums, you will no longer be covered.
Group life insurance: This is cover is often provided by your employer or a member organisation to a group of people. This type of life insurance is often not able to be customised to individuals because the policies are bought on a single contract to cover multiple employees/members. This cover usually expires when you retire or reach a certain age.

Different types of life insurance and the features and benefits

When buying insurance, you may come across several life insurance and similar products with varying features and optional extras that you can add on. Understanding what each of these are and what they cover can help you decide whether they’re right for you.

Product	Summary
Life insurance	It pays a lump sum to your beneficiaries if you die or are diagnosed with a terminal illness. The application process usually involves answering lifestyle and health questions and meeting any additional requirements set out by the insurer. Then, you can set your benefit amount, which is the lump sum your family receive. The amount of cover you decide on will impact how much you pay in premiums. You can also choose from all of life insurance or term life insurance, depending on your needs. Discover more: What is life insurance?
Life insurance for older Kiwis	There are insurers in the market who specialise in insurance just for older Kiwis. Insurance products designed specifically for seniors in New Zealand can offer benefits most helpful to people aged 50 and over. That includes the ability to take out cover at a later age and a simple application process that doesn’t need medical tests. Depending on your unique situation, you may find policies geared towards your age group more relevant and easier to take out. Discover more: Life insurance for seniors
Terminal illness insurance	Life policies may include cover for terminal illness in which your life benefit amount is paid in advance as a lump sum payment if you’re diagnosed with a terminal illness. The diagnosis must be terminal in nature, usually with a diagnosis of 12 or 24 months to live. However, every insurer is different, and what defines a terminal illness can vary between insurers. Information on how insurers define terminal illness can be found in the Policy Document. This benefit can be used however needed, such as to help you organise any final expenses you would expect your family to have, such as organising your funeral. It can also be used to pay for any palliative care that you might need in order to live comfortably and pain-free.
Direct life insurance	Direct life insurance in New Zealand refers to life insurance policies that you can purchase directly from an insurance company, without the need for an intermediary or broker. Buying life insurance directly means needing to do your own research to find the most suitable policy for you and your family. And while this may take a little more time to do, you don’t have to be a finance expert to work it out. The good thing about direct life insurance is that it may work out to be more cost-effective as you won’t have to pay for a broker. There’s no extra paperwork beyond the insurer’s application form, and you can choose from a variety of insurers and policies.
Mortgage protection insurance	This type of cover is designed to pay your mortgage if you are unable to work due to sickness or injury and may even cover death. Mortgage protection availability and terms of the policy can vary depending on the insurer. Some insurers may have age limits or specific conditions for applicants, such as a waiting period or a payment period. It’s important to compare different policies and potentially consult with an insurance advisor to find the cover that suits you. Policies can differ in terms of cover limits, waiting periods, and benefit periods, so getting professional advice can help ensure you choose the right option for your situation.
Total and permanent disability insurance (TPD)	TPD insurance pays a lump sum if you become totally and permanently disabled and are unable to work again. This can help cover medical expenses, mortgage payments, home modifications, and other costs that arise from your disability. Keep in mind that this type of insurance usually has an age limit to apply and expires at a certain age also. It's important to check with different insurance providers to understand their specific eligibility criteria and policy details.
Income protection insurance	While income protection insurance is quite different from life insurance, it can still be categorised as part of the life insurance market. This type of insurance temporarily provides a regular income if you are unable to work due to illness or injury. In New Zealand, it usually provides cover for up to 75% of your monthly income. This cover is geared towards New Zealand residents who work at least 15 hours a week. If you’re still working and rely on your regular income to meet your day-to-day expenses, this may be something to look into and talk to your financial advisor about. Keep in mind that many insurers have a maximum entry age requirement as well as an expiry age for the policy.

Discover if life insurance suits your whānau

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What is the difference between life insurance and funeral insurance?

Life insurance is designed to provide financial support to your beneficiaries should you pass away. It’s a lump sum payment designed to help replace some or all of the income you would have provided for your family to cover your financial dependants’ ongoing expenses, such as the mortgage, rent, utility bills, education fees, or medical care costs as well as some of the more immediate costs relating to your passing, such as a funeral.

Funeral insurance can help cover the more immediate cost of your funeral or tangi and other final and estate related expenses should you pass away. Your insurer will usually pay a lump sum benefit to your family when a claim is made. Funeral insurance offers a lower benefit amount and can be easy to apply for, which can be a great way to help your family with planning your final farewell and honouring your last wishes.

Find out more about Seniors Funeral Insurance

How can New Zealand Seniors help?

With New Zealand Seniors, you can tailor your policy to suit your individual needs and budget. Choose the level of cover you need, and rest assured knowing you’re backed by a respected and award-winning insurer.

Benefits of choosing Seniors Life Insurance

Flexible cover amount that suits you

Choose how much you or your family receive if you pass away or become terminally ill. You can set a benefit amount from $10,000 up to $200,000.

Easy to apply with no medicals

Simply answer eight questions about your medical history over the phone. Once approved, you can get covered in minutes.

Immediate cover

Once your policy is set up, you’ll be covered straight away for death by any cause, and for terminal illness¹ (excluding suicide for the first 13 months).

20% advance payout to cover funeral costs

When your family makes a claim, 20% of the benefit amount may be paid in advance, so they won’t have to worry about the cost of your funeral or other immediate expenses.

Triple payout for accidental death

Your family’s benefit amount will be tripled if you pass away from an accident, helping with any last-minute expenses they might face.

Your own personal claims specialist

If you or your family need to make a claim, we’ll assign you a dedicated claims specialist to look after everything. No need to explain things to multiple people.

We’ll keep your premiums manageable

Unlike some life insurance policies, your annual premium increase won’t be based on your age which will help with budgeting later in life. Plus, we offer lower starting premiums for non-smokers.

Cover for when you need it most

We know that the older you get, the more you have to protect, so Seniors Life Insurance allows you to apply from age 45 to 79, protecting you and your family until you turn 85.

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How to get life insurance

If you’re a New Zealand resident aged 45 to 79, the process is quite simple:

1 Request a quote

Answer eight questions about your health and we’ll get you a quote in minutes.
2 Choose your cover

Tailor your policy and choose the level of cover you need.
3 Get covered

Rest easy knowing the people you care about most are in safe hands.