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Life Insurance

Saying “I do” to life insurance - how much cover do married or de facto couples need?

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Finding your life partner means you’ll have someone to rely on in the good times, and the bad. As you start to build a life together, it’s often easier to get swept up in the romance and avoid any uncomfortable conversations.

Unfortunately life can be unpredictable, so it pays to be prepared for the worst, no matter how tough that conversation might feel. Investing in life insurance is an important decision for many couples — married or de facto — so in this article, we’ll discuss why securing cover for you and your partner could be a worthwhile decision for your future.


Why do married couples need life insurance?

There are numerous exciting things that come with getting married — starting a wedding Pinterest board, spending the day with your loved ones and gaining a life-long spouse are definitely causes for celebration. But, for a lot of people, married life also comes with more responsibility.

Buying your first homehaving a baby or even starting a business together are exciting life moments to share with your spouse, but they can also bring significant financial responsibility. As difficult as it might be to think about, it’s important to have a plan in place to ensure you and your partner remain financially protected if an unexpected tragedy occurred.

When you take out a life insurance policy, you can name your partner as a join policy owner— giving them equal authority to make changes on your policy and ensuring they'll receive the claim payout if you were to pass away. This life insurance payout is designed to lessen the financial stress that can come with losing a loved one. The payout could be put towards covering funeral costs, bills, mortgages, loans and other everyday expenses, meaning your partner can maintain their day-to-day life as much as possible.

For some, the loss of one income might not disrupt their day to day life too significantly, but for those who rely on two incomes to cover costs, the financial burden of losing a partner would likely result in financial hardship and lifestyle changes. Sitting down with your partner to work out what life would look like with only one of your incomes is a great first step. Consider both present and future costs, such as your children’s education and your retirement.


Life insurance and children

If you and your spouse have children, it may be even harder to maintain a comfortable life on a single income. The cost of raising a child in New Zealand is thought to be around $250,000 from the age of one to eighteen - and that doesn’t account for potential future costs such as tertiary education.

Remember, life insurance doesn’t only cover death - it can also be paid out if the policyholder is diagnosed with a terminal illness. Medical expenses can be hefty, and combined with the loss of income from not being able to work, a Life Insurance payout can lessen the financial pressure on your family during an already difficult time.


Should de facto couples get life insurance?

Marriage rates have been declining in New Zealand since 2008, meaning the country has a higher than average rate of people in de facto relationships. In fact, back in 2015, 25.5% of adults aged 20 and above were in a de facto relationship — that’s over double the OECD (Organisation for Economic Co-operation and Development) average of 10%.

As per New Zealand law, your relationship is classed as a de facto relationship if you are both over the age of 18 and have lived together for more than three years as a couple. If you have a child together, your relationship is automatically considered de facto, regardless of how long you’ve been together. And in most cases, de facto partners have the same status, rights and protection as those who are married. So, with more and more Kiwi in de facto relationships, life insurance remains an important investment that will help protect you and your partner.

Don’t view marriage as a prerequisite for getting life insurance  though - your decision should be based on whether or not your partner would be financially impacted if you were no longer around.


Who needs life insurance — me or my partner?

When researching your life insurance options you’ll need to decide whether it’s better to get a policy for both partners, or just one. It’s a big decision to choose the right level of life insurance cover, though there are some simple ways to assess what will work best for you.


  1. Insuring the main earner

    One option is to insure the highest earner whose income would be missed the most, should an unexpected event strike. This could be an attractive choice for families with children where one parent is the main earner while the other either works part time, or is a full time caregiver. If the main earner takes out a policy, the caregiving parent will not be pressured into entering the workforce for financial reasons after the death of the working parent.

    While this may be the best option for some couples, it’s important to still work out what costs might occur if the secondary income earner were to pass away. For example, you may need to pay a caregiver to look after your children if the main income earner returned to work.

  2. Insuring both partners

    Alternatively, you can both opt to be insured. For married or de facto couples who both work and earn similar amounts, this could be an easier choice than choosing which partner to insure. This could be an especially useful option in the wake of a partner’s death, allowing you time and financial support during a period of grief and change.

  3. Joint life insurance policy

    We don’t offer joint life insurance policies here at Chubb Life. As both parties in a couple have different indicators that help us determine policy premiums, we recommend having individual policies to cover one another.


What if our life or family changes in the future?

Nothing is certain, which is why it’s wise to review your policy on an annual basis, or when any life changes take place. At Chubb Life, we offer term life insurance policies. This type of policy means premiums are set for a certain period of time - usually a year. At your annual policy anniversary your insurer will review your premiums, so it can be a good idea to review policy and make any changes. This allows you to be flexible and increase or decrease your insured sum should your situation change.


  1. Having children

    Becoming a parent is a life changing experience for any couple. Welcoming a baby is an exciting time - but it’s also a time when you want to make sure the future is secure for you and your family. The birth of a baby is the perfect opportunity to investigate your Life Insurance options. If you already have a policy in place, contact Chubb Life and make sure it can be readjusted to provide sufficient cover for your growing family.

  2. Getting divorced and life insurance

    If you and your partner decide to divorce or separate, this is another time when you’ll need to talk to someone about your policy. If there are children involved then your policy can be adjusted to fit your new situation - you may want to update your policy ownership or list your children as beneficiaries in your will, for example. Because Chubb Life insures each person individually, rather than offering joint policies, altering your life insurance is especially hassle-free should your relationship status change.

    If you or your partner are comparing life insurance policies, get in touch for a life insurance quote and we’d be happy to talk about your options.


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