Adding ‘Future Insurability’ to Your Life Insurance

When setting up life insurance, you can choose any lump sum you would like. However as your situation changes over time you might find that you need a greater amount of life insurance (for example if you have had children or taken out a mortgage your need for cover will probably increase). In this case, the ability to quickly and easily increase your level of life insurance can be very important.  

Most good quality life insurance plans include what is usually called a "special events increase" feature.  The way this works is simple. Usually with life insurance, if you want to increase your level of insurance, you need to submit a new application to the life insurance company. The insurer will basically treat this like a new policy - so for example if you had a health issue, the insurer might not let you increase your life insurance, or they might charge you a higher than usual premium. However if you experience a "special event" (common examples are having a child, taking out a mortgage, or getting married) you can make an increase under the special events increase feature, and apply for more cover without needing to provide any health information. In this case, increasing your cover is as simple as providing the insurer with a written request.

So a special events increase feature is vital. However it has some drawbacks - mainly that the size of the increase is limited (often to a percentage of your existing life insurance). So if you require a larger increase, you might still need to submit a new application.   

For this reason, life insurance plans usually offer an optional feature called "future insurability". This means that you are able to increase your life insurance in the future, without needing to provide health information - and the size of the increase you can make is typically greater than that found under the built in "special events increase" feature. Find more and best advisory services, quotes and more from Newzealand's top providers life insurance nz and income protection cover