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Life insurance policy

What is a life insurance policy?

A life insurance policy is a contractual agreement between an insurance company and a policyholder, who is usually the person whose life is insured.

The policy agrees that in the event of the insured person’s death, or diagnosis with a terminal illness, the insured amount will be paid out to the beneficiary listed on the policy.

It’s important to understand what a life insurance policy is, and how it works, before choosing your insurance provider, policy type and level of cover. This page will cover key information on what a policy is and what to look out for, so that you can select the best policy for you and your loved ones.

Understanding a life insurance policy

A life insurance policy documents an agreed upon sum which is to be paid out to the person’s estate via their will in the event of the insured person’s death. The level of cover is selected by the policyholder. The policyholder is charged a regular amount, which we call a premium. This is based on the level of cover selected, the age of the insured person and their medical history. Premiums are generally paid in fortnightly or monthly instalments, but some people choose to pay annually or biannually.

A life insurance policy is designed to give the insured person peace of mind that if they were to die unexpectedly, their loved ones would be taken care of financially. The cost of living is expensive, and with mortgages, other debts and dependents to think about, it’s important to have a plan in place.

What else do I need to know?
What else do I need to know?

Chubb Life offers term life insurance policies, which means a policy is automatically renewed every 12 months and can be cancelled at any time.

A life insurance policy will be cancelled by the insurer if:

  • the Life Cover Amount is paid in full, ie a claim is paid out

  • the policyholder asks to cancel the policy

  • a Terminal Illness Benefit or Critical Illness Benefit is paid and is equal to the Life Cover Amount

  • if the policy’s premiums are unpaid for three months.

It’s very common for insurers to increase your life insurance premiums as you age. At Chubb Life, your premiums will be adjusted on each anniversary date of having your policy, these changes will reflect your current age and cover amounts. You'll always be advised in writing prior to any changes being made to your premium.

The policy owner (or the policyholder) is the person who owns and controls the policy. This is usually the person whose life is insured, but it doesn’t have to be. In some cases, the policy owner is the insured person’s children or spouse.

The policy owner can be changed at any time. You can contact the Chubb Life team to process this change.

If the premiums for a life insurance policy are unpaid for a certain amount of time, the policy may be cancelled. You can apply to take out another one, but you may need to provide your health and lifestyle information again. If aspects of your life have changed, such as your health, or you need to increase your Life Cover Amount, the premiums may change.

The policy’s terms won’t necessarily be the same as your original policy – any changes will be outlined on the new Policy Summary.

Unfortunately, the suicide rates in New Zealand are tragically high, so this question is not uncommon. Most life insurance policies do cover death by suicide, but the claim won’t be accepted if this occurs within 13 months of the policy’s start date. If your policy was cancelled and then renewed at a later date, the start date on the new policy applies. After 13 months of the life insurance policy being in place, it's likely suicide is covered.

Why do the 13 months apply? The main reason is so people aren’t swayed by the thought that their family will receive immediate cover, in the event of their suicide, when they could be seeking help instead. It’s important to reach out for help if you, or anyone you know, is thinking about suicide. You can call Lifeline for immediate, 24/7 support.

Need more information?

For further information on our Life Insurance Policies, check out our Chubb LifeOne® Policy Wording

Hopefully we have cleared up some of your questions! We know reading a Life Insurance Policy isn’t most people’s idea of fun, so if you need further clarification on anything, the Chubb Life team would be happy to chat.

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More than just life insurance


The right life insurance can you bring peace of mind from knowing that you've protected what matters most.

Your insurance is underwritten by Chubb Life Insurance New Zealand Limited (Chubb Life). Chubb Life has an A (Excellent) financial strength rating given by A.M. Best Company Inc. A summary of the rating scale is: A++, A+ Superior | A, A- Excellent | B++, B+ Good | B, B- Fair | C++, C+ Marginal | C, C- Weak | D Poor | E Under Regulatory Supervision | F In Liquidation | S Suspended. For the full rating scale and more rating information visit www.ambest.com/ratings/guide.pdf