Protect the People Who Matter Most

What Life Insurance Covers

We’ll explain exactly what life cover pays, when it pays, and who receives it.

Life insurance pays a lump sum when you die, to your nominated beneficiaries or your estate, depending on how the cover is held. Many policies can also pay early if their terminal illness definition is met. The money isn’t tied to a particular use, so it can help clear debt, replace income or meet other family costs.

Here’s what the cover actually does:

• A lump sum paid when you die, to your nominated beneficiaries or your estate
• Early payment on a terminal illness, where the policy’s definition and certification requirements are met
• Cover that can be held inside super, outside it, or split across both
• A benefit with no restriction on use, from the mortgage to school fees
• Stepped premiums that rise with age, and level premiums that may still change if the insurer reprices
• The difference between life cover and the TPD or trauma often attached to it
• Whether your policy offers an advance funeral payment before the full claim is assessed
• How long the cover runs, and the age at which a policy ends

How Much Life Cover You Need

We’ll work out a sum insured from what your family may need to pay and replace.

There's no single figure that suits every family. We consider the debt you'd want cleared, the income your household may need to replace, any costs of raising children, and the savings and cover you already hold, including any inside super.

Together, we'll work through:

• The mortgage balance and any other debt the family would want cleared straight away
• The income your household may need to replace, and for how many years
• Any school fees and childcare costs still ahead, if you have children
• Funeral and estate costs, which can fall due before an estate is settled
• Any business debt or personal guarantee you’ve signed, and whether cover should allow for it
• Any cover already held inside super, taken into account before new cover is recommended
• Savings and investments the family could draw on, which may reduce the cover needed
• The events that change the number: a new loan, a child, a lasting pay rise

Life Cover Held Inside Super

We can tell you what the life cover inside your fund would pay before you touch anything.

Default cover inside a fund is designed for a broad membership, so the amount may differ from what your family would need. It can still be valuable, subject to eligibility and the fund's terms, and premiums are generally deducted from your retirement balance. Closing or rolling over the account may end the cover.

We'll go through your fund with you and set out:

• Every fund you hold, including old employer accounts that may still carry cover
• What the default sum insured would pay against what your family would need
• Premiums drawn from the retirement balance rather than from your bank account
• Whether the nomination on the fund is binding, and when a lapsing one expires
• How a death benefit may be taxed if paid to someone who isn’t a tax dependant
• Insurance that may end if an account is closed, rolled over or inactive for 16 months, unless you’ve elected to keep it
• Why default cover may need an opt-in for members under 25 or with a low balance
• Which cover may suit being held inside super, and which may suit a policy outside it

Life Cover Held Outside Super

We’ll set out the trade-offs of owning the policy yourself and funding it from your cash flow.

A policy you own is funded from your own account rather than your super balance, so those premiums don’t reduce your retirement savings. Premiums on personally held life cover generally aren’t tax deductible, and a benefit paid to a person is generally tax free, which your accountant can confirm. The trade-off is cash flow now against the balance you’re building.

We’ll weigh both routes with you and cover:

• Premiums met from your cash flow, so the balance you’re building for retirement isn’t drawn down
• A policy held in your own name, outside the fund rules and the trustee’s discretion
• Cover that isn’t affected by a change of super fund, while insurance inside a fund may end on rollover
• Premiums on personal life cover, which generally aren’t deductible, unlike income protection held the same way
• Benefits paid to a person from a policy you own, generally received tax free
• The premium treated as a regular household cost and budgeted alongside your other commitments
• A direct debit timed to your pay cycle, to help avoid a missed premium while cover is needed
• Part of the sum insured inside super and part outside, where splitting suits the household better

Who Receives the Benefit

We can check the nominations are valid and current, so a benefit can reach the people you intend.

For cover inside super, the fund’s nomination rules and the trustee decide where a benefit goes, which isn’t necessarily what your will says. A valid binding nomination generally directs the trustee, while a lapsing one may expire. Cover outside super is paid under the policy’s ownership and nomination terms, so we review both alongside your solicitor.

The decisions we make together here:

• Whether a binding nomination is valid and current, so it can direct the trustee
• The difference between a lapsing nomination and one that stays in place
• Who counts as a dependant for super purposes, which may differ from the people named in your will
• Proportions set deliberately, so a benefit can be shared the way you intend
• Whether a death benefit could be paid to a spouse as an income stream rather than a lump sum
• Nominations reviewed after a marriage, a separation or a new child arrives
• Cover held outside super, where the policy owner decides and an estate may be involved
• Estate documents and nominations considered together, with your solicitor’s input on the will

Policy Ownership and Tax

We can help you weigh up who should own the policy, with the tax side checked with your accountant.

Ownership affects who can claim, who receives the money and how premiums and benefits may be taxed. A policy owned personally, through super, by a company or by a trust can each work differently. We consider the structure before you apply, because changing it later may require a new application, and we work with your accountant on the tax treatment.

Here's what we settle before anything is applied for:

• Whether the policy sits in your own name, in super, in a company or in a trust
• The owner who can change, cancel or claim on the policy, which is not always the person insured
• Any deductibility of premiums, which depends on the owner and purpose, confirmed with your accountant
• The tax on a benefit paid from super to somebody outside the dependant definition
• Cover linked to a business loan, and any ownership requirements the lender sets, alongside your broker
• Whether a trust should own the policy, where money may need to be held rather than paid directly
• The cost of restructuring an existing policy against what a fresh application would ask
• Ownership revisited after a separation, so the policy reflects your current circumstances

Stepped or Level Premiums

We’ll cost stepped against level premiums across the full period you expect to hold cover.

A stepped premium generally starts lower and rises with age. A level premium usually costs more at the start and isn’t based on your age each year, although the insurer may still change its rates. Which suits you depends on how long you expect to hold the cover and what you can afford over that time.

We'll model both and talk you through:

• The point at which a level premium may start costing less than a stepped one
• How long you expect to hold the cover, which shapes the comparison
• Premium rises built into a stepped policy as each birthday passes
• Whether a level premium converts to stepped at a set age, and when that happens
• Splitting the sum insured, with part stepped for a debt you expect to repay
• Affordability now against affordability at the age a claim becomes more likely
• What happens to the premium if cover is reduced rather than cancelled outright
• The age you take the policy out, which sets the rate a level premium is built on

The Terminal Illness Benefit

We can show you how any terminal illness benefit in your life policy may be paid early.

A life policy may pay early if its terminal illness definition is met, and the policy sets the certification required. For cover inside super, releasing the money also involves separate super rules, including certification by two registered medical practitioners, one a relevant specialist, that death is likely within 24 months.

What we'll read with you:

• The definition of terminal illness in your policy, and the certification required
• Whether the full sum insured is released early or only a capped portion
• How an early payment reduces the death benefit that follows afterwards
• The separate terminal medical condition test super applies before a fund can release the money
• How a terminal illness payment may be taxed, checked with your accountant
• Who receives the money when it is paid to you rather than to a beneficiary
• What the payment can fund: treatment, time at home, or clearing a mortgage
• How the wording has changed over the years, and what an older policy says

Cover for a Partner at Home

We’ll estimate the support your family may need to replace a partner’s work at home.

A partner who isn't earning may still do work the household would need help to replace. Childcare, school runs and running a home can carry real costs, and a surviving parent may need to reduce their own hours. We consider both when looking at what cover may be suitable.

Together we'll look at:

• The cost of replacing childcare, school runs and the running of a household
• Hours a surviving parent may need to reduce, and the income that could be lost
• Whether cover is suitable for both parents, not only the one drawing a salary
• Whether a partner who is not earning can hold cover inside a super account
• How an insurer assesses an application without a payslip to work from
• Any limit an insurer places on the sum insured for a partner at home
• Whether trauma or TPD alongside life cover would help with recovery costs at home
• Reviewing the split when a partner returns to paid work or steps back again

A Review of the Cover You Hold

We can read the policies you already hold and tell you what each one would pay.

A policy taken out years ago was set up for your circumstances at the time. Your debts and family may have changed since, and some older contracts carry terms that may be difficult to obtain today. We review what you hold against your current needs before recommending any change, and tell you plainly where existing cover still fits.

You'll end up with a clear position on:

• The sum insured on each policy against what the same cover would need to be today
• Exclusions or loadings applied at underwriting, and whether they still apply now
• Older contract terms that may be worth keeping and difficult to obtain in a fresh application
• Whether every policy is still in force and the premiums are actually being paid
• Cover spread across a fund and a personal policy, and whether the total is deliberate
• What a new application would ask about health and occupation since the last one
• The cost of replacing a policy against what the replacement would actually add
• A schedule of every policy you hold, in one place, with its sum insured and key conditions

cover with a health condition