Life Insurance Benefits
Paying off debt or replacing income
Life insurance benefits can help replace your income if you pass away. This means your beneficiaries could use the money to help cover essential expenses, such as paying a mortgage or college tuition for your children. It can also be used to pay off debt, such as credit card bills or an outstanding car loan.
Some people purchase life insurance with the intention of leaving the death benefit as an inheritance to their loved ones. If you’d like to have a specific person receive your benefits as an inheritance we suggest naming your chosen heir as the beneficiary on your policy. This will ensure that your life insurance benefits fall into the hands of the person you intended to receive it.
Depending on New Zealand law at the time, your heirs may need to pay an estate tax upon receiving an inheritance. It’s a good idea to consult with your insurance provider or a financial professional to understand how estate taxes may affect your beneficiaries.
Life insurance policies can also be created with your favourite charity as a named beneficiary, the III says. This can help ensure your philanthropic goals are met after you pass away, and that benefits are provided to your charity of choice.
Do I need life insurance?
Life insurance can be an important part of your financial strategy. That’s because a life insurance policy can help you ensure that your loved ones have a secure financial future after you pass away.
Not only can life insurance help cover your final expenses — it can also provide your family with a financial safety net by helping to replace your income or serving as an inheritance for a loved one.
New Zealand life insurance explained
Life insurance is a type of insurance policy that provides a lump sum payout in the event of the policyholder’s death, or upon the diagnosis of a terminal illness (with less than 12 months to live). Usually, one or more beneficiaries are nominated to receive the benefit amount in the event of your death, or the benefit will be paid directly to you in the event you suffer a terminal illness.
All-of-life insurance is a life insurance policy that covers you for death or a terminal illness in which the term of cover is for as long as you live, until you make a claim or decide to cancel.
Term life insurance covers you for death or a terminal illness for a set period of time. The cover period is usually a defined number of years or until you reach a certain age, or make a claim or cancel the policy.
As retirement approaches, many Kiwis find that their needs and financial plans can change quite dramatically. If you’re worried about what life’s later stages may bring, it’s not too late to set plans in place for your financial future and consider life insurance. Contact us at here
- everyday expenses such as regular bills, groceries and other household essentials;
- outstanding debt such as a mortgage, credit card or personal/car loan;
- childcare, or the cost of education for your children or grandchildren;
- end-of-life expenses such as medical care or funeral costs.
In some cases, your insurer may provide general cover but let you know that won’t be valid if you die while doing something risky like skydiving. To see exactly what’s excluded from your policy, always read the Policy Document for all terms and conditions, exclusions and any waiting periods. With Seniors Term Life Insurance, the only exclusion is self-inflicted injury that results in your death or terminal illness within 13 months of the policy commencement date.
While life insurance is designed to soften the blow to your family’s finances when you are no longer able to provide for them, funeral insurance has a much smaller benefit that is designed to cover the cost of a funeral or other final expenses.
Life insurance typically comes with a large benefit amount to cover longer term costs and things like the mortgage, outstanding bills, and to maintain your family’s lifestyle. Funeral insurance on the other hand usually has a limited amount of cover, however it can be a great way to help your family with any immediate final expenses associated with your passing.
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