“Made to make your eyes water” Life Insurance Premiums.

December 14, 2009 by
Filed under: Avalon's Money Thread, Cost of living, General Budgeting, Retirement, Pensions and Kiwisaver 

We are still on the hunt for decent life insurance, given that we had to pull the cover from ING, and would like to pull the cover from ASB as well.

If you are moving here from the UK – whatever else you do – make sure you have Life Insurance and Critical Illness Insurance in place before you leave and make sure you will be covered once you emigrate.

Because I can almost guarantee you will die of a heart attack one you see what you are expected to pay for it here. Its outrageous – a bloody rip off.

I explain this in more detail in the book, but basically – in the UK the premiums are set according to your age when you take it out.

Here they just go up and up and up. And up some more. And then just when you really need it – from about age 65 onwards – you would need to be a multimillionaire to afford the premiums.

We are currently looking for about 1.4m in cover. Now I know that sounds like a lot of money – and possible you might thing it’s a bit arrogant to think that Hubby would be worth this much (I am worth considerably less which is a bit depressing). But this is because we have rental properties, with mortgages on, and they need to be paid off if Hubby croaks).

If we get stepped premiums – which go up every year – then we pay about $1500 a year for the premiums ($125 a month). If you get level premiums (which stay level till age 65 and then “wallop” you with a hike you just would not believe) then we have to pay over $6000 a year ($500 a month). The stepped premium hits a truly bewildering $44,000 a year by the time you get to age 64.($3600 a month).

Compare this to my UK life insurance (which includes Critical Illness cover) costs £10 a month, and will do until the day I die. Even if I’m 127 years old.

We worked out that till age 65 – the difference in payments in level and stepped over that time makes nearly $60,000 more to get stepped premiums.

However our Insurance Broker sat me down and told me I should revisit my views on this – and look at the cost NOW. With our budget being squeezed to within an inch of its life because IBM is too tight to give even cost-of-living pay rises (but can pay $80,000,000 for a new data centre) we simply cannot afford $500 a month on premiums.

So the plan now is to take stepped premiums, and as we pay down mortgages – reduce the cover and thus try and offset the rise in premiums each year. Still – it annoys me that Kiwis so easily get ripped off.

Like what Avalon has to say?

Click Here to buy Avalon's Guide or Click Here to buy the E-Book

Related posts:

  1. How much is your life worth?
  2. NZ Life Insurance – just daft!
  3. Why the hell should I pay other people’s bank fees???
«
»

Tags: , , , ,

Comments

3 Comments on “Made to make your eyes water” Life Insurance Premiums.

  1. “Made to make your eyes water” Life Insurance Premiums. : Avalon's … Cable Body on Mon, 21st Dec 2009 6:56 pm

    2. [...] the rest here: “Made to make your eyes water” Life Insurance Premiums. : Avalon's … By admin | category: critical illness insurance uk | tags: critical-illness, illness, [...]

  2. Sophie on Wed, 23rd Dec 2009 2:24 am

    3. OUCH! I’ll look out the terms of hubby’s policy here in the UK then, rather than just cancelling it when we leave. At the mo it seems to be VERY expensive for me to get life insurance (younger, risk-free job but cancer survivor), but maybe compared to NZ it would be cheaper anyway. Hmm. Time to investigate!

  3. Avalon on Wed, 23rd Dec 2009 2:59 pm

    4. Blimey Sophie – thats tough :( I have no experience of this myself – but if you want – email me your contact details, and ill put you in touch with one or two insurance brolers I know over here who I’m sure will be happy to give you some rough idea of what you are looking at. At least they will be able to tell you if you CAN get insurance here after surviving cancer. This is one of those awful situation that makes my blood boil – you should get a commendation for fighting off the disease!

    But as for your hubby – definatley keep it. You can always cancel it later if you find a product in New Zealand you prefer, but you probably wouldnt be able to restart the UK one once you leave.

    Email me at avalon@avalonsguide.com if you want some contacts to chat to about cover for you :)

Tell me what you're thinking...
and oh, if you want a pic to show with your comment, go get a gravatar!