Life insurance is a mystery to many people. Knowing when to get a policy and how much cover you may need often stump those looking to help protect their family’s financial future. There seem to be no shortage of insurance companies to choose from, so how can anyone know that they’re getting the best deal?
For many people, the cost of life insurance is important. Research presented by the Financial Services Council in June 2019 found that 28% of New Zealanders felt life insurance policies were too expensive. With household budgets already stretched thin, this comes as little surprise.
Though the cost of life insurance may be important, it’s only one factor to consider. The policy with the lowest premiums may not be the right fit for your needs. For many Kiwis, finding flexible cover that’s backed by a trusted and caring life insurer may be just as important as price.
Other factors when choosing life insurance
There are many factors that may come into play when you choose a life insurance policy. After price, the company selling the policy could be the most important.Going with a trusted insurance company may play just as a big a part in your decision making as finding the right price point.
When comparing life insurers, you may want to look at these four factors:
1.Who issues the policy?
Life insurance in NZ can be sold directly by the insurer themselves or through a distribution partner. This information is often found on the company’s website and in the policy wording. You could also learn this through news items or press releases (such as this one, announcing that Momentum Life had received their life insurance licence).
This information may matter, as it could affect the amount of money your family can claim in the future. Insurers often limit how much cover you can have with them, even if you bought the policy from two different brands. If you have more than one life insurance policy that’s backed by the same insurer, the benefit paid under one of those policies may be reduced.
2. What’s the insurer’s Financial Strength Rating?
Choosing a life insurance company may feel like an exercise in trust. You’re paying money now and trusting that the business will be there in the future. How can customers know the company they pick will be there when they need them?
A Financial Strength Rating is an indicator of how healthy an insurance company is, including how well placed they are to pay future claims. This rating is provided by independent financial reviewers and can help give customers more confidence when taking out a life insurance policy. In New Zealand, this information must be placed on the company’s website by law and in the policy wording.
3. Independent awards or quality marks
Life insurance companies typically aren’t shy about singing their own praises. However, this could help you decide who to go with. Awards can give customers important information about a life insurance company.
Industry awards may be a good indicator of how well an insurance company is performing, as well as how innovative or forward-thinking their business is. Insurers may also receive awards from independent companies recognising their strong customer service or community involvement. NZ insurers can also receive quality badges, such as the WriteMark, that demonstrate their commitment to customer care.
4. Customer reviews
Word of mouth can be great for all types of businesses, and life insurance is no exception. Reading customer reviews could help you get a better sense of the service you might expect after taking out a life insurance policy.
Customer reviews can vary depending on where you find them. A Google review could be left by anyone (even someone who’s never held a policy with the company), while reviews on Feefo only come from real, verified customers. You may also want to take some negative feedback with a grain of salt. Customers are much more likely to voice a complaint than sing a company’s praises. However, if the feedback for an insurer is overwhelmingly positive or negative, then this could be a good signal of how well they treat their customers.
Finding the right life insurance policy can be tricky, but knowing what to look for could help you make this decision. The above tips could help you narrow down your options and find cover that works for you and your family.
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