Insurance 101: The Most Common Types of Insurance in NZ and Why You May Need Them

by Sarah Kelsey

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Life is full of unpredictable twists and turns. If anything risky happens to you and your family, do you have the financial capacity to get out of it financially?

Insurance protects you from financial losses and damages from unexpected situations in life. It’s a contract between you and the insurance company that transfers the risk of unforeseen events for an agreed monthly repayment premium. This is legalised through a policy.

Having insurance can help you get back on your feet and start over with the biggest problem sorted out—money. These days, you can secure almost anything—from automobiles and home to dental care—when you want to.

Take a look at the most common types of insurance in New Zealand and why you need them.

1. Life insurance

Life insurance is one of the most basic types of insurance. It pays out your money as a lump sum if you meet an untimely death. This can help those you leave behind to move forward and pay the funeral costs. But, this is just one of the many things life insurance can do.

Some life insurance policies also act as an investment tool. Others even let you borrow money from your policy. It’s flexible enough to cover you only during a certain period or throughout your life—great as a starter insurance if you want to know the benefits of having additional financial support.

Under life insurance, there are usually two types — whole life and term life insurance. However, some companies may offer more. Each type has its own advantages and drawbacks, as well as levels of coverage.

What are the best life insurance companies?

It varies per individual. Life insurance benefits are often determined by physical factors such as gender, age, habits, and vices as well as financial factors like your credit rating, ability to pay premiums, policy underwriting, wording, and added features.

Check out some of the leading life insurance companies in New Zealand.

  • AIA International Limited
  • Partners Life Limited
  • Fidelity Life Assurance Company
  • Asteron Life Limited
  • Cigna Life Limited

Who should get life insurance?

Anyone can get life insurance, even those that are already a beneficiary from another policyholder, such as their parents. Here are the best examples of who can purchase life insurance in NZ:

  • Parents with minor children
  • Parents with children who need special care
  • Adults who co-own a house or property
  • Elderly who want to leave an inheritance for their children
  • Young professionals looking for a low premium
  • Low-income families who can’t afford burial costs

Different life insurance types are designed for different people. Make sure to enquire with a professional before taking out life insurance.

2. Health insurance

Another common insurance type is health insurance. Although New Zealand has a free healthcare system available to all citizens and permanent residents, a growing number of Kiwis are taking out health insurance — and this is for a good reason.

Health insurance covers medical-related expenses including surgical, prescription medicine, and dental expenses, up to some extent. When you go to a public hospital, it can be packed with people, so you may have to wait long. Often, you’re also dependent on whoever GP is available on the hospital.

By getting your own health insurance, you can avoid these long wait times and ensure you get specialised care. Some policies even include choosing a GP for your medical care, giving you the choice to pick the right coverage and set your own limits.

There are many types of health insurance to take advantage of from leading insurers. Some of the most common ones are individual, family senior citizen, maternity, and personal accident life insurance.

What are the best health insurance companies?

The most important factor to determine your premiums is your state of health! If you have pre-existing medical conditions or have harmful vices, the cost of your health insurance increases greatly. Having immediate family members who have hereditary disease can also increase your premiums.

Here are some of the leading health insurance providers in New Zealand:

  • AIA Health Insurance
  • Southern Cross Health Society
  • nib health cover
  • Partners Life Medical Cover
  • Accuro Health Insurance

Who should get health insurance?

Suffering even from a simple illness can drain out all your savings. That’s why everyone should get covered with health insurance. If you’re under these certain scenarios, it’s strongly recommended to have insurance as you’re at high risk of disease or bankruptcy.

  • Young adult aged 26 years or older
  • Kiwis without regular income
  • Business owners who has employees
  • Retirees
  • Unemployed

With healthcare becoming a more important discussion because of COVID-19, the perks of getting private health cover despite having free healthcare becomes more apparent. Talk with a licensed professional to ensure you’re getting the right health insurance coverage.

3. House and contents insurance

One of your most valuable properties is your house! It’s where you eat, sleep, keep your important items, grow your family, and build memories. That’s why it’s crucial to keep it secured for anything that can happen.

House insurance covers the structure itself, while contents insurance covers the items inside your home. This works best when they’re combined, but you can always get them separately. Depending on your policy, your coverage can include anything from theft, fire, damages to property caused by other people, and natural disasters.

Most providers let you choose from third-party, third-party with fire and theft, as well as comprehensive policy. Of course, it’s best to choose the comprehensive plan to cover you for all scenarios, but it may also be a smarter choice to choose a cheaper policy with less coverage in some situations.

Who are the best house and contents insurance companies?

Generally, leading insurance companies offer different tiers of coverage. Your premium may depend on your credit rating, policy wording, customised features, as well as additional covers not stated in their standard plans. 

However, this can still vary depending on their processes, responses, ease of claim, and customer service. Check out the top house and contents insurance companies.

  • BNZ Insurance
  • AA Insurance
  • FMG Advice & Insurance
  • State Insurance
  • AMI Insurance

Who should get house and contents insurance?

Of course, you’ll need to have your own home before you can take out house and contents insurance. However, you may still get some level of coverage even if you’re renting. Check out renters insurance if you want to get coverage for your contents and important items.

4. Car insurance

Life on the road is very unpredictable. Even if you’ve taken all the necessary measures to ensure safety, you may still experience accidents and other emergencies! Taking out your car for repairs can easily cost a hundred dollars. Getting car insurance can ensure your vehicle remains in top condition without the expensive fees.

Depending on the terms and conditions of your policy, your coverage can even include maintenance of your car. This includes regular checking of tyres, oil changes, and air conditioning systems, among others.

Leading car insurance companies offer third-party, fire, and theft, as well as more specific and comprehensive policies. As long as you’re of legal age and holding a full driver’s licence, you can secure your vehicle with insurance. 

What are the best car insurance companies?

The cost of your premium depends on your age, claims history, level of excess, type of vehicle, and the manufacturing date of your vehicle. Aside from yourself, you can also include other people who are likely to use your car in your policy.

These are the top car insurers in New Zealand:

  • Tower Car Insurance
  • AA Car Insurance
  • Cove Car Insurance
  • State Car Insurance
  • AMI Car Insurance

Who should get car insurance?

Everyone with an automobile should get car insurance, regardless of the age of the vehicle. Although, you may have to tell your provider if you’re using the car for business as this may affect your coverage and premiums. Besides a four-wheeled vehicle, you can also secure your boat, motorbike, among others.

5. Travel insurance

If you’re living life on-the-go, you need to get travel insurance to protect yourself from whatever may happen in the places that you go to. Emergencies while travelling can be very expensive. These incidents can be theft or loss of a valuable item, cancelled flights, medical treatment for accidents, and other accidents.

Aside from personal travel insurance, you can get family plans which cover children or the elderly who are travelling with you. If you’re a business owner, you can also cover your employees who are travelling with you on a business trip.

While this may not be as popular, you can also get travel insurance plans even when you’re just going around here locally. Whether you’re travelling via plane, boat, or car, most insurers have a specialised plan to secure your travels.

What are the best travel insurance companies?

One of the biggest factors that will affect the price of your travel insurance is your destination. Even if the duration of your trip, age, and other factors remain the same, your fees may vary greatly. Compare travel insurance online to know more about the average premium in your destination.

Take a look at the best travel insurance companies that tick all the right boxes: 

  • AA Car Insurance
  • ANZ Travel Insurance
  • Southern Cross Travel Insurance
  • 1Cover Travel Insurance
  • Westpac Travel Insurance

Who should get travel insurance?

It’s recommended that everyone gets travel insurance wherever they’re travelling, especially those that fall under these categories:

  • Families with children
  • Business owners on a trip
  • International travellers
  • Travellers with medical conditions
  • Travellers on a cruise
  • Expats in a foreign country
  • International students

If you really need to travel during the pandemic, it’s even more important to get travel insurance. Check if your provider offers COVID-19 coverage. 

How can you get the best insurance policy for you?

Whenever you sign up for insurance, make sure you have the best one for your needs. Just because it worked for other people doesn’t mean it will also work for you. Different people have different situations, so it will always change depending on your needs.

Here are some tips on how you can find the best insurance policy for you.

Know what you really need

Insurance companies offer different plans, and not all of them can match your needs. To get the best plan for you, determine what you really need first. Once you’ve set this, work from there. Search for plans and providers that can cater to these needs.

The cheapest option isn’t always the best

Most people tend to choose the cheapest plan because they don’t want to pay high premiums. Of course, it’s never a good idea to skimp on things that will provide a cushion for you in case of emergency. Sometimes, you may have to pay additional fees to get the extras that you want. 

When you total all your costs, you may end up paying more than what you should be paying when you’ve taken out a comprehensive plan in the first place.

Some policies just aren’t for you

Not all policies are created equal. They may look the same, but they’re created very differently. Always recheck your policy, including the fine print because that’s where most differences in the plan are.

Always compare before finalising your plan

Before concluding that your plan is the best one for your needs, compare it against its best competitors. You may find an even better deal when you’ve done a thorough side-by-side comparison. 

Insurance comparison website glimp provides a free, easy-to-use tool for seeing the features, premiums, and coverage of different types of insurance in New Zealand. They have partnered with NZ’s leading insurance providers to let you compare insurance plans and find the best one for you and your family. Try their free online comparison tool now and get personalised results, all under four minutes!