Life Insurance

A range of insurance products cover the risk of death (life insurance), specified life-threatening health conditions (trauma insurance), or the inability to work (income protection or disability insurance). This cover can be essential if you have financial commitments. Take time to decide whether the cover is right for you.
 

Our Information Sheets in our Document Library have quick guides to common issues. Consumer tips and case examples are included.

Our Glossary explains the meaning of technical terms used in tips and cases.
 

COVID19: RiskInfoNZ magazine asks life insurers about their approach to underwriting new insurance applications, and measures for customers facing financial stress, including premium waivers. Read more

Check out the Financial Services Council (FSC) FSC Code of Conduct* that has the nine standards which fall into three core objectives covering: principle ethical standards, consumer information and communication, and delivering good outcomes to consumers. (*This is a industry code for FSC Members only (mainly made up of Life & Health Insurers, Investment Funds), and is designed to support the professionalism of the financial services industry and the FSC members. It is about increasing trust and confidence in the providers of financial services and the products they deliver.)

Tips

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  1. Check your policy and be clear about what it does and does not cover

    Get a copy of your policy and ask questions about the cover to ensure it is right for you. Trauma insurance, for example, doesn’t cover traumatic events. It will only cover certain specified life-threatening health conditions as set out in the policy e.g. only defined cancers and heart attacks.

  2. Check your policy exclusions and limitations

    Declined claims due to exclusions are a common complaint to the IFSO Scheme. A life insurance exclusion could be death caused by dangerous or illegal activities. An income protection limitation could be the cover only applying for a limited time period.

  3. Always provide full and accurate information about your medical history

    Give your insurer full details of your medical history. Don’t guess. Even if you accidentally leave out details, your future claim could be declined, and your policy treated as though it didn’t exist. Your insurer will not usually get a copy of your medical notes. It’s a good idea to get your own copy of your medical notes to either give to the insurer or to refer to when filling out the insurance application forms.

  4. Premiums for life, trauma and income protection insurance can increase as you get older

    It is important for you to know the ongoing cost of your life, trauma or income protection insurance. Some policies have a fixed cost, while others will increase as you get older (stepped premiums). Ask questions about the future costs of the insurance to avoid surprises.

  5. Know the risks if you want to change to a new policy and insurer

    If you change your life, trauma or income replacement insurance, the new insurer will take into account your full medical history up to that date. This may mean you are not covered for medical conditions your current policy would cover, exclusions could be added to your new policy, or you could pay more in premiums. It is important to understand the risks of changing cover, particularly if you have had any changes to your health.

Cases

Driving under the influence

A vehicle insurance claim was declined because the driver had taken sleeping pills the night before.
See the case summary

Premiums paid were more than the funeral cover was worth

Consumers need to understand that, sometimes, they will pay more in premiums for funeral cover than the cover is worth
Mrs Parata* arranged funeral insurance cover for her husband, for a sum of $20,000.
See the case summary

Increasing premiums

Lucy and Michael* said they were misled when their life insurance premiums increased nearly three-fold.
The couple complained to the IFSO Scheme that "rate for age" was never explained and they were told ...
See the case summary

Request to reduce life cover

Insurers and financial advisers must act with reasonable care and skill.
Shortly before he died, Sam asked his financial adviser to reduce his life insurance cover from $268,000 to $100,000.
See the case summary

Cancer, non-disclosure

Your full medical history must be disclosed when you apply for insurance.
Jin had life and trauma insurance. After his stage 4 colon cancer diagnosis at age 31, he made a claim.
See the case summary

Full medical history needed

Tell your insurer your full medical history, even if it's old news.
When Rose arranged insurance, she didn’t mention her depression, skin, sinuses, spine, liver, cholesterol or ear issues.
See the case summary

Income protection reinstated

Tell your insurer, or adviser, about your full medical history and write it down.
Robert didn’t mention his chronic headaches on his insurance application, but he did tell the bank adviser.
See the case summary

No cover for childbirth trauma

Trauma insurance cover is specific. Check the exclusions, and the conditions listed in your policy.
Carol sustained significant physical trauma during childbirth, but her trauma insurance claim was declined.
See the case summary

Life insurance, reduced payment

Don't leave medical information off an insurance application.
After Mary died, her life insurer discovered she'd had diabetes, cholesterol and blood pressure issues.
See the case summary

What is fair and reasonable conduct?

Educational, cultural and personal circumstances of customers are relevant.
When Lagi's claim was declined, the IFSO Scheme asked whether the sales process was fair and reasonable.
See the case summary

When the policy pay-out is limited

Check your policy. Accident cover is not life insurance.
When Tim’s dad Roger died, Tim made a claim under Roger’s policy called the “$50,000 Plan”. The insurer paid out $500.
See the case summary

Frequently Asked Questions - Life Insurance

My premiums are increasing, why is it more than the rate of inflation?

There are all sorts of reasons that your premiums increase each year, depending on what type of policy you have. For instance, your age on a life policy, your claims history on a vehicle policy, an increase in weather damage for your house policy. The best thing to do is talk to your insurer about why the premiums have increased. The IFSO Scheme can only consider complaints about premiums if the insurer has misrepresented the premium levels when you arranged the policy, or if the insurer has increased the premiums outside the terms of your policy.

Do I have to tell my insurer everything about my medical history?

Yes. This information helps your insurer assess your application and can affect the cover it will offer you. If you do not give your insurer the information, it can decline to consider a claim and treat your policy as though it did not exist. If you are unsure or cannot remember your full medical history, it can be helpful to get a copy of your medical records to refer to when completing your insurance application, or to give a copy to the insurer.

What if I just forgot or left out information unintentionally?

The current law does not make a distinction between intentional and unintentional non-disclosure. If you accidentally leave out information on the application, the insurer can still treat the policy as if it didn’t exist and decline to consider a claim.

Why has my insurer only raised this issue about lack of information now, when I have made a claim?

When you make a claim, your insurer will check your medical history. This can lead to your insurer finding out information which it should have been given when you applied for insurance. The insurer can then take the action it would have if it had known about the information.

Why is it that my doctor says I’m very sick but the company won't pay me under my income protection policy?

Your insurer will only pay you if you meet the definition of total or partial disability in your policy. This definition is different for each policy. For example: your policy may cover you if you cannot do your job anymore, or it may only cover you if you can never work in any job ever again.

This question is different to the question about whether you have a medical condition or are very unwell. You may not feel able to work, but still not meet the definition for "disability" in your policy.

How much information can my insurer ask me to give when I make a claim?

You must give your insurer enough information to prove you have a valid claim. However, your insurer is entitled to obtain further information, which may include specialist medical reports or further financial information. This can be an ongoing process, as your insurer may need information from a number of people, and they may ask you to see a doctor or specialist it appoints. You may also have to see a doctor regularly to fill in updates for the insurer and have to pay for them.

How long can my insurer take to accept my claim?

It is difficult to put a time limit on how long it takes to assess a claim. Often your insurer will need more information from medical specialists, and this can take a number of months. Your insurer is entitled to fully assess the claim and can request this information, even if you do not think it is necessary.

Is my insurer subject to a standard of care or code of conduct?

Most life and health insurers are members of the Financial Services Council (FSC) and sign up to the FSC Code of Conduct* that has the nine standards which fall into three core objectives covering: principle ethical standards, consumer information and communication, and delivering good outcomes to consumers.

(*This is a industry code for FSC Members only (mainly made up of Life & Health Insurers, Investment Funds), and is designed to support the professionalism of the financial services industry and the FSC members. It is about increasing trust and confidence in the providers of financial services and the products they deliver.)

Disability insurance info sheet
Non-disclosure info sheet
 

Financial Services Council Code of Conduct (effective 1 January 2019)