I recently read an article on the Consumer NZ website about the high price of Funeral Insurance (click here to read the article).
Consumer NZ reviewed 10 policies offering $10,000 funeral cover for a 64-year-old. The review found that by age 84 the amount paid in premiums exceeded the $10,000 covered with most policies. In most cases you would be better off putting the money you would be paying in premiums into a savings account.
Most people don't want to be a burden on their families. When you are younger Life Insurance is an affordable way to protect against this, but as you get older the premiums get more expensive. One way to help mitigate the costs of Life Insurance is to lock some in now and fix the premium so that it remains level until you reach age 80. You could fix as much cover as you want, but may only want to limit this to $50,000 or $100,000 for example. The premiums for level cover are initially higher but the premiums do not increase so it will end up saving you a lot of money over the lifetime of the policy.
As an example, Life Insurance with a benefit amount $100,000, for a male, non-smoker:
** The scenario below is based on Level Life Insurance being taken out at age 35
At Age 35:
Life Insurance (premiums increase each year) monthly premium = $13.84
Level Life Insurance (premiums fixed to Age 80) monthly premium = $32.08
At age 45:
Life Insurance (premiums increase each year) monthly premium = $21.78
Level Life Insurance (premiums fixed to Age 80) monthly premium = $32.08
At age 55:
Life Insurance (premiums increase each year) monthly premium = $53.10
Level Life Insurance (premiums fixed to Age 80) monthly premium = $32.08
At age 65:
Life Insurance (premiums increase each year) monthly premium = $179.53
Level Life Insurance (premiums fixed to Age 80) monthly premium = $32.08
If you are interesting in looking at your options or reviewing your existing cover, please get in touch.