In this article we cover:
What does life insurance cost?
The cost of life insurance in New Zealand depends on a variety of factors. These can include your age, sex, certain lifestyle choices (most importantly whether or not you smoke) and how much insurance you’re taking out.
Men, generally, pay more than women for life insurance. According to Canstar’s research, a non-smoking woman in her 30s should expect to pay around $28 per month ($336 per year) for a life insurance policy with a benefit of $500,000. In comparison, a non-smoking man in his 30s can expect to pay around $35 a month ($504 per year) for the same level of cover.
To give you an idea of life insurance costs for men and women of different age groups and smoking statuses, Canstar has reviewed a range of life insurance quotes from leading providers across different age profiles.
The grid below shows the approximate range of premiums reviewed online from five leading providers for stepped cover (see below) for a sum insured of $500,000.
Range of monthly life insurance premiums by age
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| Age | Female | Male | ||
|---|---|---|---|---|
| Non-Smoker | Smoker | Non-Smoker | Smoker | |
| 25 | $22-$28 | $37-$46 | $39-$46 | $65-$76 |
| 35 | $26-$30 | $48-$52 | $33-$37 | $67-$78 |
| 45 | $50-$59 | $102-$117 | $59-$67 | $134-$167 |
| 55 | $132-$158 | $265-$321 | $160-$195 | $371-$464 |
| 65 | $397-$489* | $715-$828* | $600-$726 | $1209-$1402 |
It’s important to note that price isn’t everything. If you decide to take out life insurance, you should also consider the type of life insurance available, the level of cover and whether any exclusions apply.
You might also consider whether you can bundle your life cover with total and permanent disability (TPD), trauma or income protection cover.
→ Related article: How Much Life Insurance do I Need?
What are stepped and level payments?
Life insurance premiums come in two main types: stepped and level:
Stepped cover: the most popular type of cover, stepped premiums start at a reduced level and increase as you age.
Level cover: level premiums remain at a fixed level and only increase if you increase your level of cover.
The choice between the two comes down to how long you intend to maintain your life insurance. If you plan to carry on paying for life insurance into old age, level cover can work out cheaper over time, because your premiums remain static. Although, your initial payments will be higher than if you choose stepped cover.
However, if you only intend to maintain your life insurance during your 30s and 40s, for example if you want to ensure financial stability for a young family, the lower premiums offered initially by stepped cover could be preferential.
What factors can affect life insurance premiums?
The above figures are just a rough guide, for as with any type of insurance policy, be it home and contents, car insurance or health cover, your individual circumstances will have a big influence on the final cost of your policy.
Factors that impact on the cost of life insurance include:
- Age
- Gender
- Smoking status
- Health and medical history, including any pre-existing conditions
- Job and any associated risks
- Pastimes and hobbies
- How you purchase your cover (e.g. direct from an insurer, or via a broker or financial adviser)
- Choice of cover, e.g. if you bundle life cover with TPD, trauma cover or income protection
- Amount of cover you take out
How can I make my life insurance premiums cheaper?
If you’re looking for ways to manage the cost of your life insurance, a good place to start is to shop around and compare products from a variety of providers. Some life insurers offer discounts and other special offers to new customers. For example, you might be able to get a discount if you pay your premiums annually instead of monthly, bundle your policy with trauma or disability cover, or take out a joint policy.
You could also consider making lifestyle choices. Not smoking is always a good idea. And as you can see from the above insurance quotes, if you can quit smoking, you’ll be able to improve your premiums, as well as your health, considerably.
If you’ve kicked the habit for good, consider contacting your life insurance provider to ask them how to change your smoking status to non-smoker. Keep in mind that an insurance company will generally consider you a non-smoker if you have not smoked for 12 months. This can vary between insurers, so check your product disclosure statement (PDS) or speak to your provider to confirm. However, there can also be consequences for not disclosing to your insurer that you smoke, even if it’s only occasionally.
And once you do take out a life insurance policy, it’s also a good idea to review your policy from time to time. Check the level of cover you have is suitable for your specific situation and that you’re not paying for more than you need.
About the author of this page
This report was written by Canstar’s Editor, Bruce Pitchers. Bruce has three decades’ experience as a journalist and has worked for major media companies in the UK and Australasia, including ACP, Bauer Media Group, Fairfax, Pacific Magazines, News Corp and TVNZ. Prior to Canstar, he worked as a freelancer, including for The Australian Financial Review, the NZ Financial Markets Authority, and for real estate companies on both sides of the Tasman.
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