Life cover as it is marketed is insurance cover in the event of death. You will often hear it referred to as Life Insurance, which is a range of products and Life Assurance as it assures the life insured that their family’s financial well-being will be taken care of. This does assume you have sufficient levels of cover to do so.
Life Cover is one of the simplest insurance contracts in the world, someone dies, a death certificate is issued, the insurance company matches this to their policy document and they pay the owner of the policy a sum of money, usually their estate, family or business partners.
The reality is real life isn’t always that simple and things can get in the way of what should be a quite simple claim process. If you have had you policy for a long time, we do find life cover claims go smoother. If you have recently changed insurance providers, in the 5 years before, we find the insurers ask more questions and more medical information does get requested.
It’s also not as simple because most life cover policies have other features and benefits.
- Terminal illness, where if you are diagnosed with a terminal illness you can get an advance on your life cover. Terminal illness claims can be very emotional claims to deal with
- Special events increases, where you get married or divorced, take on more debt, take on the care of a dependant family member, have children to name a few.
- Financial assistance support benefits to help with accessing appropriate advice on what to do with the money realised from a policy.
- Funeral or bereavement support benefits, to help out with immediate funeral expenses.
- Repatriation benefits, to get the life assured home if they died overseas.
- Children’s funeral benefits
Then there are the standard policy exclusions. On a life policy these also need consideration. Generally the fewer the better.
- The standard policy exclusion we have on the life cover policies we arrange is; Suicide within the first 13 months of taking or increasing cover. Many people assume suicide is never covered, with most policies it is only for the first 13 months of the policy.
- With some providers who have children’s funeral benefits we will see exclusions relating to the parents or guardians causing the death, clearly to remove the child abuse aspect.
With other policies, we often see more exclusions and wider ranging exclusions. These are where the providers core business is not insurance but they also provide simple insurance policies as part of their offer. I’m talking about some of our large retailers, general insurance providers and banks; life insurance is often just another product.
With a lot of these policies we see additional exclusions:
- Cover ceasing at age 65. Most ‘full’ advice policies will continue as long as you pay the premium, this is often far later than the current retirement age.
- Default War and Terrorism exclusions. These are generally only applied if you are known to be going into a war zone at the point of application, otherwise they should not be there.
- Participating in a criminal act. So you were doing something dumb and managed to kill yourself. Your family shouldn’t have to pay for your dumb actions. Again another exclusion we would consider unreasonable.
- Being intoxicated or under the influence of drugs. Very similar to the one above, and again not something your family should have to pay for, you have already with your life.
- We have seen a few with exclusions where you have no cover if you are outside the territorial waters of New Zealand, this takes having an overseas holiday to another level of risk.
Life cover is often just life cover, but the different additional bits and pieces of the policy can make a significant difference in how this works for you. For example, some policies will allow you to increase cover without medical applications for buying a holiday home, others will let you do this for an investment property, but not all of them will allow you to in either situation. So getting the right policy for you now and in the future is important.
If any of this has raised questions about the cover you have or the need for cover, please get in touch, we would welcome the opportunity to clarify things for you so you have confidence the cover you have will do what you want it to.