Who knew adulthood is just a revolving list of things to worry about? Asset management, mortgage repayments, student loans, travel… Life Insurance is often way down the list for a lot of Gen Z-ers who would rather research their OE or different ways to eat two minute noodles in order to save for a house. Life Insurance feels like one of those problems to look into when you hit your thirties or forties. Very few people realise age isn’t the most important factor when it comes to comparing your insurance options:
It’s actually all about life stage, not age.
Life is full of moments that affect your financial health. We all have that friend from high school who got married younger than everyone else, and there’s a solid bet some of your friends will have kids much older than everyone else, too. These milestones are great opportunities to reassess your insurance and make sure you’re adequately covered.
At Cigna, we’re all about understanding where you are in life — and if you could do with another layer of protection for the people you love, then we’re here to help work out the best Life Insurance approach for you.
If I already have car and contents, do I really need more insurance?
It’s the classic combo for younger Kiwis — car insurance and contents insurance. Done. But what about if you’ve got more to protect? Say, your earning ability?
Your twenties and thirties are typically an age stage when you’re working a lot. You’re building your career, the money starts coming in, and you start to finally get on top of your student loan debt. For young professionals and entrepreneurs, your earning ability is your biggest asset at this age. If your income was somehow comprised, and you have dependents that rely on you financially, how are you going to make it work?
If you’re under 35, you’re in the most underinsured group of New Zealanders according to a study completed in 2011 by Massey University. This doesn’t mean that your age group doesn’t need insurance, it means there’s a high chance you don’t have enough insurance.
Young Kiwis often assume ACC is a catch-all option if our health somehow prevents us from working. But ACC won’t cover everything — only accidental injuries. This means that if you have to take time off work for things like illness, mental health, or an injury that develops over time, your income will not be protected. It’s important to understand your options for making sure you’re covered in all instances of something unfortunate happening.
I have debt. How does this work with my Life Insurance?
Are you in a de facto relationship, or a situation where people rely on your income? If you have a spouse or children, a Life Insurance policy can pay a ‘death benefit’ (morbid, but important to understand) to them should the unthinkable happen.
If you have people who rely on your income, and you also have student loan debt or a mortgage, a Life Insurance policy will protect your loved ones from the financial responsibility of paying this should you pass away unexpectedly. The amount of young New Zealanders with student loan debt is huge. In 2016, there were 130,426 active borrowers under the age of 26 (i.e. students who borrowed from the loan scheme in 2016). So, it’s fair to say that a lot of Kiwis are already paying back debt at quite a young age - would your loved ones cope with this debt if you were no longer around?
If you have other debts, like a new car, an expensive lease, or some credit card debt you’d rather not think about, it’s important to consider whether your loved ones could take on this debt on their own if something happened to you. Making sure you have an effective Life Insurance policy can prevent these scenarios from playing out and wreaking havoc on the financial health of your family.
Do I need Life Insurance if I’m healthy?
Not many people know this, but the best time to get Life Insurance is when you’re young and healthy — your insurance premium will be cheaper for a period of time.
Premiums do increase as your age - the older you get, your health generally worsens in different ways, so it will cost more to get Life Insurance. It shouldn’t come as too much of a surprise, right? It makes sense. Life Insurance rates throughout your twenties and thirties will increase gradually, but not by much. However, once you hit your forties it’s common to see a spike, and the cost of Life Insurance can increase significantly year on year from there on in.
I can’t afford Life Insurance
We understand that Life Insurance cost is a big part of deciding whether to get cover. It’s important to have a good think about whether you need protection or not. Remember if we don’t think you need coverage at this particular point in your life, we’re not going to sell it to you. Here are some ways that you can be smarter with the cost of Life Insurance if you actually do decide you need it.
If you buy Life Insurance young, there’s underwriting involved.
What is underwriting?
It’s the process an insurance company goes through to work out your risk for them to insure you. It entails evaluating your health, career, age and considering other factors.
An economical way to get Life Insurance is by checking out Cigna’s Term Life Insurance. This type of cover provides protection for a specific period of time (a ‘term’) — usually one year. Your premiums (also known as annual payments) are fixed for the year, and coverage is usually far less expensive than whole life insurance.
What are my other insurance options?
Sometimes, Life Insurance isn’t the best option for your life stage if you’re in your twenties or thirties. So what else can you do to make sure you’re financially protected?
One option is building up an emergency fund.
How does an emergency fund work?
This is a separate account, often separate even to your ‘savings’ account, where you store money that can only be used strictly for emergencies. This means that if you have to stop working for some reason, or you urgently need money to survive, you can dip into your emergency fund. Just make sure you replenish it when you’re back in action!
At Cigna, we don’t just offer Life Insurance. We also offer income insurance, which could be a suitable way to protect yourself, financially speaking.
What is Income Protection Insurance?
Our biggest asset as a young working professional is our ability to earn an income. An interruption to your earning ability not only leaves you with an immediate cash deficit, but can also jeopardise your career and financial goals. If you’ve got no dependents, it might be worth checking Income Protection insurance.
If you’re unable to work due to injury or illness, your groceries, bills, and mortgage still need to be paid. Income protection insurance protects your earning ability by insuring a percentage of your income. This is particularly useful in instances whereby ACC doesn’t come to the party. ACC does not cover lost income due to illness, and four out five long term absences from work are due to illness and not injury.
Cigna’s Income Protection policy can cover up to 75% of your income, every month you’re off work, for up to 2 years. If your claim is accepted, it’s up to you to decide how to use the money. For more detail on the policy, check out our Income Protection policy wording.
Bear in mind that Income Protection is a short term option. Once the period of payment ends, no further benefit is paid - so if you are still ill or injured, your policy will no longer help.
So, Life Insurance can provide long-term financial security for your family in the event that you die, while income protection provides immediate financial assistance if your income stream is interrupted.
I think I need more Life Insurance cover
If you’ve already got Life Insurance cover, but you think you need more cover for other life milestones you’ve got coming up (house, anyone? Kids?) you probably need to revisit your policy. If you’re a Cigna customer, you can increase your cover for certain life events (like the ones mentioned above) without having to go through the underwriting process again. This makes it even easier to update your policy or Life Cover.
If you think you need to make changes to your current policy by increasing your cover, here are some questions to ask yourself:
Will these changes affect the terms of your policy?
How has your health, lifestyle, occupation or age changed since you first took out cover? How will this affect your premium?
Will your policy changes incur a stand-down period or anything else that affects your cover?
You can use our Cigna Life Insurance calculator, or seek financial advice from a financial advisor before coming to us for Life Insurance quotes. One of our Cigna consultants is ready to help you, no matter your life stage. Talk to us today!