Investments can be part of your broader financial strategy, but they don't replace the need for life insurance. It could be tough to build up an amount enough to self-insure in time using just the $100 a month.
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“Is it common to have life insurance in nz? Why do I struggle to think about the fact of paying $100 a month (although I have a partner, kids, and a mortgage)? Could I invest, maybe? Or even high yield savings acc? I know the younger the better, but..?”
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In New Zealand, having life insurance is a personal financial decision, and its prevalence varies among individuals. Whether it’s expected depends on several factors, including your financial situation, age, and personal preferences. There are some considerations to help you decide if life insurance is right for you.
Financial Security
Life insurance is designed to provide financial protection for your family in case of death. Suppose you have a partner, children, and a mortgage. In that case, having life insurance can offer peace of mind by ensuring that your loved ones are financially secure if you pass away.
Affordability
You mentioned needing help with the idea of paying $100 per month. Life insurance premiums can vary based on age, health, and coverage amount. Finding a policy that fits your budget while still providing adequate coverage is essential.
Investing vs. Insurance
Many choose to have both life insurance and investments as part of their financial plan. While investing is a valid financial strategy, life insurance serves a different purpose. It’s about protection, not wealth accumulation. Life insurance is meant to replace your income and cover expenses in the event of death. Investing is about growing your wealth over time.
High-yield savings accounts and other investments can play a role in your financial plan, but they may provide a different level of financial security than life insurance. They can be part of your broader financial strategy, but they don’t replace the need for life insurance. It could be tough to build up an amount enough to self-insure in time using just the $100 a month.
Time sensitivity
You mentioned that getting life insurance while you are younger is better. This may be true. Life insurance premiums tend to be lower for younger, healthier individuals. Waiting may result in higher costs or future health issues affecting your insurance coverage.
Ultimately, the decision to have life insurance in New Zealand or anywhere else depends on your individual circumstances and priorities. It’s advisable to consult with a financial advisor or insurance expert who can help you assess your specific needs and guide you in making an informed decision about whether to invest in life insurance and, if so, what type and amount of coverage is appropriate for your situation.
Hope this helps.
Regards, Clive Fernandes (Financial Adviser)
Director – National Capital
Disclosure: I am the director of National Capital, a KiwiSaver advice firm. The information in this post is only general in nature and is not personalised financial advice. Please contact us if you want financial advice.
